Mitchells & Butlers property deal still on the cards

A number of shareholders in Mitchell's & Butlers (M&B) are said to be still hoping for a property deal to revitalise the value of their holdings in the troubled pubco.

City analyst Mark Brumby of Blue Oar Securities said this morning that M&B investors including Trevor Hemmings - who owns Trust Inns and Herald Inns & Bars - Leonardo Capital and Unigra International were thought to be "sympathetic" to Robert Tchenguiz's "aspirations towards a property-based solution going forward".

"Elsewhere, Blackstone, CVC, KKR and a number of other leveraged debt/private equity players have been mentioned as having an interest in M&B although Punch Taverns remains the only company that has formally made an approach and the options going forward therefore remain broadly unchanged," Brumby added.

Another City finance expert with experience in pub trade takeovers said the likelihood of a property-based venture for M&B was slim.

"I'm not ruling it out, but banks are under a lot of pressure themselves at the moment, as evidenced by the growing number of redundancies within their own ranks.

"It's difficult to see where the kind of money, billions of pounds, to fund such a deal for M&B would come from at the moment," the source added.

Tchenguiz's R20 group, which owns or speaks for just short of 30 per cent of M&B's shares, is still smarting from the collapse of a proposed property joint venture with the group.

His own formal 550p offer for M&B, lodged in May 2006, was at the time rejected by the group's board as "failing to recognise the value and prospects of the company".

M&B's shares were trading this morning at 446.5p, down 5.25p.

M&B is meanwhile reported to be considering an asset swap as part of its recently announced strategy review, with one possibility being a switch of hotels to Whitbread, in return for a number of pubs.

A spokeswoman for M&B refused to comment on the reports, but said that via its strategic review the group was looking at all options available to it to create shareholder value.