Lewis circles as sales slow at Mitchells& Butlers

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Mitchells & Butlers, the pubs group, yesterday sought to play down suggestions it had become more vulnerable to a takeover from the Bahamas-based billionaire Joe Lewis after issuing a disappointing trading update.

Mr Lewis, who owns 23 per cent of M&B and is talking about bidding 230p-a-share for the rest through his Piedmont investment vehicle, has until 17 October to table a formal offer or walk away. M&B maintains the bid "significantly undervalues" the business.

However, M&B's disappointing update, which revealed revenues rose just 0.5 per cent in the nine weeks to 17 September, as underlying food sales rose by 1.1 per cent and drink increased by 0.2 per cent, is stepping up pressure on the company. This is a marked decline on the 3.1 per cent like-for-like growth recorded in the 42 weeks to 16 July.

M&B's shares fell 2 per cent to 246.5p yesterday, although they remain substantially higher than Mr Lewis' 230p approach.

Paul Leyland, at Investec, said: "We see this potentially impacting the value of any bid".

A Piedmont spokesman added: "It is a very disappointing report card for all shareholders. It highlights our concerns about the operational and financial performance of the business."