M&B's sold pubs could be merged with Town & City

Stonegate Pub Company, the new outfit which will run the 333 wet-led pubs Mitchells & Butlers (M&B) announced last week it is selling, could be merged with the Town & City Pub Company when the deal completes.

Ian Payne, Town & City's chairman and who has been involved in the £373m deal for several months, said today he hoped to be in a position to bolt Stonegate onto the company, or merge the two operations, once the acquisition completes in November.

"I've been working with TDR Capital [which financed the proposed purchase of the M&B sites] for some time and am now to start talks with my own banks.

"We've got three months until the deal is due to complete and until then these pubs will be operated by M&B. Once completion has taken place I would hope the opportunity will arise [to bring Stonegate into Town & City]."

Last week M&B announced it had agreed to sell the 333 non-core wet-led pubs and bars to Stonegate, which has been created and funded by TDR Capital.

Two of TDR's senior management team, Manjit Dale and Stephen Robertson, were part of the banking group which helped create Punch Taverns in 1997.

The GMB trade union has highlighted the link with Punch Taverns and warned of possible job losses at the Stonegate pubs.

M&B, which is now focusing on food-led pub operations, plans to use the proceeds of the sale to reduce debt and buy sites for pub restaurants in locations such as leisure parks.

The sale of the 333 pubs is subject to shareholder approval but is expected to complete in three month's time without a hitch.