Britain's Spirit Pub snubs bid from Irish cider maker C&C

* Pub group Greene King (LSE: GNK.L - news) already in talks to buy Spirit

* C&C shares fall over 10 pct after rebuffed approach

* Cider maker seeking to enter British pub market (Adds source says C&C bid much less than 115 pence)

By Conor Humphries

DUBLIN, Oct 24 (Reuters) - British pub group Spirit has rejected a takeover approach from cider maker C&C Group but gave the Irish firm a month to submit a formal offer to challenge a 723 million pound ($1.2 billion) bid by Greene King.

Pub owner Greene King this week increased a cash-and-stock deal to value its rival Spirit, which has over 1,200 pubs across Britain, at 109.5 pence per share.

The Times newspaper reported that Magners cider maker C&C had bid 115 pence per share in cash and stock, with at least a third in cash, but a source with knowledge of the deal said the bid had been "much closer" to 110 pence.

The source also said that the C&C bid had a much larger cash component than British firm Greene King's 8 pence per share.

Spirit's share price was up 0.7 percent at 107 pence at 1215 GMT, giving it a market capitalisation of about 703 million pounds.

C&C and Spirit both declined to disclose the offer price.

C&C, which would be a newcomer to the British pub market, said it hoped to use Spirit's network to boost sales in England and Wales, where it is much weaker than in Scotland and Ireland (Other OTC: IRLD - news) .

It said a deal would also provide cost synergies and improve its access to capital.

But investors reacted negatively to the rebuffed approach, with C&C shares falling 10.7 percent, the biggest loser on the Irish stock exchange which was down 0.45 percent.

"The market was surprised by this announcement and has difficulty understanding where there are sufficient synergies to make this deal work," said Goodbody analyst Liam Igoe.

Spirit said that, under British takeover rules, C&C had until Nov. 20 to make a firm offer.

Canaccord Genuity (Other OTC: CCORF - news) analyst Nigel Parson estimated that Greene King would be able to save around 35 million pounds in synergies from the tie-up compared with 5-10 million pounds for C&C.

Greene King's share price was down 1 percent.

(1 US dollar = 0.6238 British pound) (Additional reporting by Abhiram Nandakumar in Bangalore; Editing by Pravin Char)