Shares in Punch Taverns were up on the FTSE 250 in morning trading after the pub owner gave the conclusions of its strategic review, announced last October.

The group said it would be demerging Spirit and Punch to form two independent public companies. The demerger is expected to be completed before Autumn this year.

Punch said that keeping it's managed and leased businesses (Spirit and Punch respectively) together is "not sustainable" and that the structural change is needed to "drive value".

The group said that while Spirit needs greater investment and development to turn it around and drive growth, the requirements of the Punch are repositioning and downsizing.

The group added that it would be cutting its leased business to a "core of around 3,000 high quality pubs".

Ian Dyson, Chief Executive of Punch Taverns, said, "We believe that there is a significant value creation opportunity at Punch, with immediate upside in Managed and longer term upside in Leased. We do not believe that either opportunity can be maximised within the current Group structure and accordingly, we propose that the two businesses be separated. This will be achieved by the demerger of Spirit and the creation of two independent public companies.

A demerger will provide the platform to enable both businesses to focus on the very different strategies required to deliver shareholder value and will provide choice and liquidity for investors. Spirit will be positioned to deliver market leading sales and profit growth and to expand with the aim of becoming the UK's leading managed pub operator. Punch will be positioned to drive long term value by downsizing to a core estate of around 3,000 pubs with the aim of becoming the UK's highest quality and most trusted leased operator."

By 10:30 shares in Punch Taverns were up 4.49 per cent on the FTSE 250 to 76.85 pence per share.

FTSE