Mitchells & Butlers unruffled by Tchenguiz reports

Mitchells & Butlers is "on track" to update shareholders on its future plans, including whether or not to convert into a real estate investment trust (REIT).

A spokesman for the managed pub group said it planned to advise shareholders of its thinking on the issue of REITs at the interim results announcement on May 22.

There were no announcements scheduled before this date, he added, and the group would not comment further.

His comments came after weekend press reports suggested property tycoon Robert Tchenguiz would seek to force M&B's hand over the issue of whether the group converted to REIT status.

If it refused to do so Tchenguiz, who holds 16 per cent of the pub group and claims support from 40 per cent of M&B's shareholders, would launch a hostile bid for the company, the reports said.

Tchenguiz was rebuffed by M&B last year when he bid 550p a share for the group. M&B shares were trading today up four per cent - 29p - at 761.5p.

Geof Collyer, leisure analyst with Deutsche Bank, said he believed that "better longer value for shareholders can be generated by not converting to a REIT".

However he noted that the M&B board still had to "wrestle with the strategic question of whether to provide shareholders with a load of cash now and go for the riskier operating company with its possibly unsustainably low fixed charge cover, or to retain ownership of the pubs and generate much better longer term returns for investors, although not quite so immediately".

Meanwhile the issue of retaining shareholder loyalty remains paramount for M&B. All eyes will be on the group's interim results statement on May 22.