M&B next in line for takeover

MITCHELLS & BUTLERS is expected to fall prey to a takeover bid now it has been forced out of the running for the £2.3bn Scottish & Newcastle pubs estate.

And City sources say that the most likely predator will be the successful bidder for S&N, creating a major new pubs chain.

It is believed that Mitchells & Butlers will be snapped up to create a company running more than 3,500 pubs and restaurants.

M&B, created in April when Six Continents split its pubs group from its hotels group, was itself thought to be one of the frontrunners in the race for S&N's pubs.

But the company was shocked when it failed to make the shortlist of three and now looks vulnerable to a takeover itself.

The successful parties who were informed on Friday that they had made it on to the shortlist were Laurel, backed by

Nomura; Spirit Group, formerly part of Punch Taverns and backed by Texas Pacific and Blackstone Group; and the private equity pairing of CVC and Cinven.

One City analyst told Financial Mail: 'Whoever buys the S&N pubs estate will need to buy M&B to get the cost-savings. And the failed

parties are also likely to go for it. It's a win-win situation for shareholders.

'It would involve a lot of money but there would be big benefits to be gained by putting the two together.'

'Mitchells & Butlers is definitely ripe for a takeover,' said another analyst. 'Even though it was big enough to be in the running for S&N, we're expecting the successful bidder to have a look at M&B.

Last week, M&B was putting a brave face on its failure to reach the S&N shortlist. A spokesman said: 'We are in a very good position at the moment. The S&N estate was a nice-to-have, not a must-have.'

The company is going ahead with the return of £400 million in cash to shareholders, and says that any bids for the company would have to ensure that shareholders receive full value for their holdings.

But sources cast doubt on M&B's future with no possibility of a deal with S&N.

The three remaining bidders for S&N will now have to firm up their offers, with one major factor being the beer contract. S&N, which brews Foster's and Kronenbourg, is keen to sign the future owner up to as long a contract as possible.