M&B rejects takeover bid

Mitchells & Butlers has rejected a takeover offer from its major shareholder Piedmont, which it claimed “significantly undervalues the company.”

Piedmont, an investment company set up by Barbados-based billionaire Joe Lewis, made an initial offer for the UK pub group of 224 pence per share back in August.

The terms of the cash offer allowed an alternative option for M&B shareholders to receive shares in a newly formed, unlisted company controlled by Piedmont.

At the time, M&B shares were trading at their lowest level since March 2009, 38% below their January 2011 peak of 361p.

After its initial offer was rejected by independent directors of the M&B board, Piedmont responded this week with the suggestion of a possible offer of 230p, representing a 2.4% discount on M&B’s share price at the close of trading on Monday.

Acting on the advice of UBS Investment Bank, M&B’s independent directors yesterday unanimously rejected this possible offer.

Although the directors noted: “there can be no certainty that any offer will ultimately be made,” Lewis has previously been accused by the company of trying to take control on the cheap back in early 2010.

The move comes at an unsettled time for the pub group, which is currently without a permanent chief executive, following the surprise departure of Adam Fowle earlier this year.

Fowle’s announcement came just two months after the resignation of chairman John Lovering, only a year into his post, sparking further rumours about tension between the board and its major shareholders.