North West-based pub chain Honeycombe Leisure has effectively put itself up for sale over frustration with the City's valuation of the company.
According to an insider, AIM-listed Honeycombe has been in talks with at least one major pub chain about being taken over.
Since July it has been considering all its "strategic options", including a management buy-out, following advice from its bankers.
Bryan Wardman, joint-chief executive of Honeycombe, said: "We are looking at a number of options for the best way forward. These are difficult times in the sector. Last week our share price put us below our net asset value, which makes no sense. We are not in favour in the City."
The move is believed to have been mirrored by a number of other pub companies, according to Roger Hardman, director of research house Hardman & Co.
"Honeycombe is indicative of the sector, which has under-performed the market for the last four years. All quoted pub companies will be doing reviews like this and saying what do we do now?" he said.
Hardman said that as well as a cloud over the sector as a whole, Honeycombe's acquisition of the Devonshire Pub Company for £32 million in March was a major part of the company's problems.
"The share price has been disastrous after this purchase because the City believed it had overpaid and took on debts. But it was a very good fit and in two years time it will make money," said Hardman.
Wardman admitted he "didn't like the level of debt", but added that the company still has plans for further acquisitions.
Related stories:
Avebury grows with Honeycombe pubs (16 July 2001)
Honeycombe to raise £10m after profits fall (6 July 2001)
Devonshire sold to Honeycombe (14 March 2001)