M&B's future still uncertain

The future of embattled managed pub operator Mitchells & Butlers (M&B) remains in doubt after rival Punch Taverns ruled itself out as a sole bidder but left the door open to launching a bid with other parties.

Tenanted pub giant Punch approached M&B in February with terms of a possible merger, after the latter incurred a £274m loss on the closure of a proposed joint-venture property hedge fund, which was a victim of the credit crunch.

The deal would have created, by a significant margin, the largest pub operator in the country, responsible for one in six pubs in the UK and with 10,500 sites under its aegis.

M&B's future could now be in the hands of private equity groups Blackstone and CVC, which are believed to be building a stake in the company. Punch said that it had been approached by a number of third parties with relation to forming a consortium for a takeover deal.

However, several City analysts believed that the management team at M&B were determined to avoid any such outcome and were sceptical that the situation would be resolved any time soon.

Mark Brumby, analyst at Blue Oar Securities, said: "It doesn't look as though anybody comes out of this smelling of roses."

He added: "A break-up bid for M&B remains a possibility but, if it involves Punch as part of a consortium, it will be on less favourable terms. And though M&B possibly should be taken over, the question remains: by whom?"

However, one analyst, who did not want to be named, believed that, having deflected a solo bid from Punch, the pub company would now be likely to retain its independence.

He said: "Private equity cannot afford to buy them because they cannot raise the money, and the only deal was with Punch. They are doing everything they can to remain independent."

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By Christopher Walton

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