Doubt over R20 move on M&B

While Robert Tchenguiz's R20 was forced to admit its interest in Mitchells & Butlers (M&B) this week, industry watchers remain unconvinced he will succeed.

Mark Brumby of Oriel Securities believed it was "relatively unlikely" that a consortium led by R20 will buy M&B, since the suggested opening offer of around 510p was too low.

"We believe that M&B, which is perfectly capable of doing most of what R20 is likely to propose itself, will have an extremely robust defence at any price below 600p," he added.

Panmure Gordon's Douglas Jack said that a take-out price for M&B was around 540p a share, "which would be fair for a leading managed pub estate that is 85 per cent freehold", equating to a multiple of 10.6x 2006's estimated earnings.

A bid, if it comes, would have to be in the region of £3bn, plus debts, to succeed.

M&B said in a statement that "should details of any offer be forthcoming the company will make an announcement as appropriate".

Shares in the managed pub chain soared by nearly 20 per cent to 490p following the announcement by Mr Tchenguiz's R20 investment company that it had initiated talks with the group.

Mr Tchenguiz is still keen to buy a large company like M&B, having missed out on acquiring Spirit Group at the end of last year despite tabling a higher bid than the eventual winner, Punch Taverns.

Ian Payne, chairman of R20's Laurel Pub Company, confirmed the group was looking to make an offer for M&B. "I've been working with Robbie on this deal, we've got a consortium together and we've got to decide whether we make a bid," he said. He would not confirm the identity of the consortium's members, although it is understood to include HBOS with Goldman Sachs advising.

Reports of an M&B move for Whitbread's Beefeater and Brewers Fayre chains were meanwhile deemed far-fetched by those close to the situation.