Punch ready to land knock-out blow on reeling M&B
Feb 5 2008 by Iain Laing, The Journal
PUNCH Taverns has confirmed plans to create a £3.7bn pub giant by merging with troubled rival Mitchells & Butlers.
The deal would cement Punch’s position as Britain’s biggest pub company with more than 10,500 sites.
The move comes after Birmingham-based M&B – owner of chains including All Bar One and Harvester – last week racked up £274m in losses following a collapsed £5bn property deal last summer. The firm’s finance director resigned and the group confirmed potential takeover interest in a turbulent week for the business.
Under the merger, Punch and M&B’s shareholders would each own 50% of the new company. M&B’s shareholders would also receive a cash payment of £175m.
Punch, which boasts a pub estate of 8,450 sites, said the cost-saving logic behind the deal was “compelling”.
“Punch believes its proposal is attractive in terms of value, speed and deliverability,” it added.
The boss of the new company would be current Punch chief executive Giles Thorley, with M&B’s chief executive, Tim Clarke, becoming chairman.
This forces out M&B’s current chairman, Roger Carr, whom shareholders called on to resign last week in the wake of the firm’s disastrous property venture.
The group lost £274m after hedging against rising interest rates last summer as part of the deal with entrepreneur and 23% shareholder Robert Tchenguiz. Banks withdrew funding from the property deal following the credit crunch and interest rates have since come down, adding to M&B’s losses.
The stock market value of M&B has dropped around 50% since the summer from a peak of £3.6bn, and in December it was relegated from the FTSE 100 Index. M&B, which operates around 2,000 premises under other brands such as O’Neills, said it was considering Punch’s plans alongside other potential bidders.
Private equity groups Blackstone, Cinven, TPG and CVC are also thought to be circling the group.
“The board has commenced its strategic review process and will give careful consideration to all proposals as part of this process,” it added.
