PUNCH Taverns was yesterday said to have won the £2.7bn race for rival Spirit - a deal that creates the largest pubs operator in the UK.

Punch, which acquired Hartlepool-based Pubmaster in 2003, is reported to have offered £60m more than property tycoon Robert Tchenguiz for the portfolio of 1,800 pubs, bars and restaurants including brands such as Chef & Brewer.

A deal would see Punch overtake Enterprise Inns as the UK's largest pubs group as its estate of 8,200 pubs is roughly 400 short of its rival.

Spirit would be its third major acquisition in two years after Punch splashed out £1.2bn on Pubmaster and £219m on Avebury Holdings this summer.

The City has been holding its breath on a deal since June when Punch made an approach to Spirit and a number of other bidders entered the fray.

Among the parties thought to have contested the auction are billionaire investors the Barclay brothers and Australian bank Macquarie.

Robin Saunders, the former WestLB investment banker, is also believed to have made a formal offer via her Clearbrook Capital Partners investment vehicle.