Hopes fade for Mitchells & Butlers takeover

Click to follow
The Independent Online

Speculation that Mitchells & Butlers, the pubs group that was demerged from Six Continents last month, would be taken over receded yesterday, after one private-equity group said it was no longer interested.

BC Partners, which approached M&B with a £2.8bn takeover offer ahead of its separation in March, yesterday blamed the group's management for its decision to abandon its plans. It said that since lodging its bid it had "not been given the opportunity to undertake any due diligence", professing itself disappointed at the lack of any organised auction for the business.

In its defence, M&B denied that BC Partners had even asked to see its book. Roger Carr, the chairman, said: "We have had no contact and no request for any information of any sort from BC Partners." As the head of a short-lived committee set up to examine any bids for the then-Six Continents, Mr Carr was responsible for rebuffing BC's initial approach. M&B's shares slipped 2.5p to 223p.

The group, which owns brands such as All Bar One and Harvester, is pressing ahead with plans to refinance its balance sheet by securitising its 2,100-strong estate. It will make a progress report along with its maiden interim results next Thursday. Analysts reckon M&B could return up to £600m, or 80p a share, to investors, after the refinancing.

Sources close to BC Partners said that once the management, led by Tim Clarke, had refinanced the group it would be "bid proof". They estimated that a securitisation would cost up to £50m to unravel. "It creates a poison pill," one source added.

The private-equity group, which emerged as a possible predator after the then-Six Continents had defeated a £5.6bn hostile bid from Hugh Osmond, the leisure entrepreneur, said it "reserves the right to make a recommended offer for the company at a future date". City takeover code rules bar BC Partners from making a fresh move for at least six months.

Private-equity houses, which are attracted to pub companies for their asset backing and stable cash flows, must obtain management backing to proceed with any takeover approach. Under their own fund-raising criteria, they are prevented from "going hostile".

Nigel Parson, a leisure analyst at Williams de Broe, said BC's withdrawal "changes nothing" as "there are plenty of other potential interested parties". These could include Morgan Grenfell Private Equity, Cinven, Terra Firma, Texas Pacific, KKR and Blackstone, he added.

The list of potential bidders for M&B prompted Scottish & Newcastle to backtrack on its previous plans and hoist the "for sale" sign over its own pubs arm.