Mitchells & Butlers (M&B) has confirmed it is in talks to acquire Punch Taverns' managed division Spirit Group – just weeks after Punch withdrew a merger proposal.

After weekend reports revealed that the two parties had met last week to discuss the possibility of a deal, M&B today said it is now “actively considering” how an acquisition of Punch’s managed business could be best funded.

In a statement to investors, M&B said: “The board believes that significant value through enhanced sales and profitability can be created by integrating Punch's managed pub business into M&B operational and brand structure.

The board has now initiated an approach to Punch to explore whether terms for such a mutually beneficial transaction can be agreed.”

The deal forms part of the conclusions of a strategic review into M&B initiated after the company incurred a £274m loss on the closure of a proposed joint-venture property hedge fund with tycoon Robert Tchenguiz.

M&B operates approximately 2,000 pubs in the UK, accounting for 3% of the country’s total estate but 10% of its total pub turnover. 

Spirit, which was bought by Punch in 2006 for £2.7b has approximately 800 pubs, including the Chef and Brewer brand.

Punch withdrew its merger proposal for M&B last month – which involved a 50/50 merger with a cash payment of £175m for M&B shareholders.

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Punch Taverns completes Spirit purchase >> 

By Christopher Walton

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