Punch Taverns rules itself out of Mitchells & Butlers acquistion

Punch Taverns has terminated discussions with Mitchells & Butlers over a potential acquisition of its managed pub division Spirit.

Punch said a disposal of Spirit would not be in the interest of its shareholders.

However the pub company said it reserved the right to make another bid in the next six months if one of seven potential scenarios took place, including a change in management at M&B.

The statement this morning closes a “will-they won’t-they” take over saga that began on 4 February when Punch approached M&B with an £11b merger proposal after M&B made a £274m loss on a hedging fund for a joint property venture.

M&B said it regretted that Punch had rejected the opportunity to discuss a “mutually beneficial transaction” which could have created significant value from enhanced sales and profitability.

At the end of March Punch ruled out a solo bid for M&B but said it might still make a move as part of a consortium.

Earlier this week M&B proposed a counter deal to acquire Punch’s managed division Spirit Group, which would have cost the company between £700 to £800m.

Mark Brumby, analyst at Blue Oar Securities, said: “This is not good news for anyone. To blame personalities is tempting but perhaps wrong, the truth is worse than that – there is a very restricted [or no] market for debt and deals cannot be consummated.  

“This leaves both players in a worse position than they were yesterday and has implications for the whole industry.”

By Christopher Walton

Mitchells & Butlers has 'less than 50%' chance of acquiring Spirit >>

Board at Mitchells & Butlers under fire after £274m loss >>

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