Lewis walks away from the battle for M&B


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The Independent Online

The billionaire tycoon Joe Lewis has dropped his bid for All Bar One-owner Mitchells & Butlers declaring it "increasingly risky" as the market conditions have deteriorated.

Mr Lewis's investment vehicle, Piedmont, announced yesterday it had withdrawn its 230p per share offer for the pub and restaurant company after several months of talks.

Insiders at Piedmont, which currently owns nearly 23 per cent of the leisure group, said the market had changed since they first approached M&B with an offer, and the deal was "increasingly risky. Retailers on the high street are feeling the pinch and with the headwinds facing consumer; it is not a pretty picture." One also reiterated concerns about the company at an operational level.

Senior figures at the vehicle believe that a recent trading update bore out its point of view, although M&B disagreed. At the end of September the company announced that revenues had risen 0.5 per cent in the nine weeks to 17 September. Piedmont said at the time it was "very disappointing" adding: "It highlights concerns about the operational and financial performance of the business."

Shares fell as much as 14 per cent on the news although they recovered in the afternoon. Piedmont has had a tempestuous relationship with the M&B board and said it would remain an "active and engaged shareholder" despite the failure to buy the company.

M&B were in buoyant mood after the suitor walked away. Its interim chairman Bob Ivell said: "The independent directors have been consistent in their view that an offer of 230p would substantially undervalue the company." He said the company would "focus on our growth strategy".

Nigel Parson, an analyst at Evolution Securities, had criticised the 230p per share offer and yesterday said the collapse of the deal was "good news for shareholders". He had encouraged investors to hold out for closer to 350p, where the stock traded in January.

The City is now waiting to see if a counter-bidder will emerge for the company. Analysts pointed towards potential interest from rival Greene King and Elpida. Mr Lewis will not be able to return to the negotiating table for six months under Takeover Panel rules unless there is a rival bid.