Chocolate heir to take over control of the Groucho

The idea was to make it the hub of a network of select haunts for trend-setters but yesterday the wheels came off the plans of a chocolate heir and a PR guru to jointly transform the Groucho Club.

The favourite watering hole of the London chatterati, ranging from media aristocracy to chat show regulars, is the subject of on-going talks on a deal to allow its joint owner, Matthew Freud, to sell out.

Spinmeister to the great and the good, Mr Freud is understood to be negotiating a settlement with his business partner Joel Cadbury, the restaurateur and member of the confectionery dynasty.

The two men won a corporate battle last year to take over the club in London's Soho from its founder, Tony Mackintosh, after paying an estimated £12m for the rights to the select venue. But their proposals to resurrect the fortunes of the club, the first of a series of drinking dens for A-list celebrities, failed to win over a hard core of 4,000 members and led to strains between the shareholders.

Their blueprint for the Groucho, which has recently lost ground to competitors such as Soho House, had included a chain of branded hotels and leisure facilities to capitalise on the club's name.

But sources confirmed yesterday that negotiations to give Mr Cadbury full ownership were set to be concluded within weeks. Mr Cadbury's bars and restaurants company Longshot owns 27 per cent of the Groucho.

Mr Freud, who holds about a third of the club with other backers but had no role in its day-to-day running, is understood to have decided to pursue other interests.

One senior figure close to the negotiations said: "There is a complicated arrangement being reached which will see Longshot assume control. Matthew has made clear his desire to leave."

Mr Freud and Mr Cadbury declined to comment on the discussions yesterday.

The deal will represent a coup for Mr Cadbury, who with Mr Freud had seen off a challenge from fellow chocolate heir Benjamin Fry to buy the Groucho last year. Mr Cadbury already owns bars and restaurants in Chelsea.

But the emergence of the "Chelsea set" as full owners of the Groucho is unlikely to go down well with some regulars, who have already complained of a more commercial attitude in the club. The high-profile departure in May of artist Damien Hirst was followed by grumbles that its status as a genteel enclave had been replaced by hard-headed practices which require members to register their credit cards rather than run up a bill for payment at a later date.

Others point out that while the stars of the moment tend to gravitate towards Soho House and other venues, the Groucho still remains popular with many power brokers who are glad to see it return to a less high-profile status.