Pub merger brews

Punch Taverns and Mitchells & Butlers are reported to be in talks regarding a potential merger. M&B, whose shareholders include the well-known property investor Robert Tchenguiz …

… has come under pressure to unlock value from its property portfolio. Tchenguiz, who holds a stake of around 19% in the company, has called for M&B to spin off its property portfolio into a REIT.

M&B announced the launch of a £4.5 billion property joint venture in May this year, but plans were abandoned in the middle of the credit crunch.

This is not the first time that Punch Taverns and M&B have been linked. Earlier on this year, the companies conducted talks regarding a potential asset swap but nothing came of it. If the deal goes through, the resulting company will be the UK’s largest pub operator, with 11,000 premises and an estimated value of £4.9bn. In order to ward off the competition authorities, both companies may have to sell off some of their tenanted pubs but, otherwise, no major competition hurdles are expected.

Fionnuala Synnott, 28/11/07