M&B ‘may sell off brands to cut debt’

Well-placed industry sources suggest that Mitchells & Butlers (M&B) may sell one or two key brands to reduce debt if Piedmont, the Joe Lewis investment vehicle, succeeds in taking the company private.

Sources claim that Nicholson’s, Harvester and Crown Carveries may be the obvious brands to come under review for sale if Piedmont succeeds in having a widely-expected improved offer to buy the company accepted.

Analysts believe that the Nicholson’s estate, which comprises 81 city-centre pubs with 44 of them in London, is one obvious candidate for a sell-off.

One source said: “The Nicholson’s estate is one that the family brewers and someone like Greene King would just die for.

“It’s more than 90% freehold and just a fantastic estate — mostly in London but with fantastic sites in major cities including 10 great sites in Scotland.

“It’s not easy to hive it off because it is part of a securitisation, but it’s doable.”

Other analysts argued that M&B would prefer to sell its Crown Carveries estate, which consists of more than 100 sites.

A sale of Harvester would arguably make the biggest dent on the M&B debt pile.

It has around 190 sites with turnover (net of VAT) of around £27,000 per week per site.

“The acquisition of Harvester by Greene King would transform the business, although selling the brand wold be a silly thing for M&B to do.”

M&B currently has net debt of £1.9bn. A sale of Nicholson’s could raise around £250m, according to one estimation.

Harvester is estimated to be worth around £600m. It is thought the possible sale of one or two M&B brands has already been raised at management meetings.