Punch Taverns plans surprise bid for M&B

Punch Taverns is proposing a surprise offer for its competitor Mitchells & Butlers (M&B). If the deal goes ahead, it will create Britain’s biggest pubs group worth £4.9 billion with over 11,000 pubs.

It is believed that Punch, the largest pub and bar operator in the UK, is exploiting the pressure M&B is under from shareholders, including Robert Tchenguiz and Irish investors JP McManus and John Magnier, to create value after a big property deal was postponed in the summer.

It is thought that some M&B investors are eager to revive this deal although others are believed to have approved of a tie-up with Punch in a bid to create returns for shareholders.

M&B is due to report annual results this week and has run up costs of £140 million so far due to the delayed property deal. In 2006, group profits were £208 million, although this is expected to fall by around 6% to £196 million.

Earlier this month, Giles Thorley, chief executive of Punch said the pub industry is challenging currently due to increasing agricultural prices putting the cost of beer and food up.

Furthermore, smokers are spending less time in the pub due to the ban imposed on July 1 and drink-related health warnings from the Government.

Thorley added that the outlook for the group remained good in the long-term.

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