"The board of Greene King confirms that it has approached the board of Spirit in relation to a potential combination of the two companies," the firm said in a brief statement in reponse to recent press speculation.
It comes after Greene King reportedly made an offer of around 110 pence per share for Spirit, a hefty premium to Monday's closing price of 75.5p, valuing it at around £725mln.
Hospitality giant Spirit (LON:SPRT) has 450 leased pubs and over 750 managed pubs.
Greene King said it would announce a firm offer or withdraw by October 21 this year in accordance with takeover rules.
Spirit Pub shares raced up over 19% on the news.