The Blackstone Group and CVC Capital partners are planning a bid for London-based pub chain Mitchells & Butlers, The Guardian newspaper reported Monday.
The plan, which would give Mitchells & Butlers shareholders the chance to own about half the business, would block a £2 billion ($3.9 billion) offer made February 4 by rival pub operator Punch Taverns.
Over the weekend The Telegraph reported that Tim Clarke, the chief executive of Mitchells & Butlers, is actively seeking alternative bidders to Punch, and that he would most likely resign if the two companies were merged rather than take a position as the chairman of the combined group, which had been proposed. However today Mitchells & Butlers denied that report. The £11 billion merger would create Britain’s largest pubs operator.
Mitchells & Butlers is undergoing a strategic review after reporting losses of £422 million ($840 million, €565 million) this month due to its failure to close a lucrative property deal last year.
Property entrepreneur Robert Tchenguiz, who was involved in the property deal attempt last year that caused the company’s losses, increased his stake in the company early this month from 23 percent to 29.9 percent, and it has been reported that he is leading the effort to find private equity bidders for the business. In addition to Blackstone and CVC, Apax Parnters and Cinven are also said to be being courted. Mitchells & Butlers reportedly sent out confidentiality agreements last week to prospective bidders.
Some analysts have speculated that Punch may be planning to turn the freehold property owned by Mitchells & Butlers and Punch into a real estate investment trust (REIT). Such a combination would give the merged company a collection of 10,300 pubs.