Mitchells & Butlers (M&B) has put 53 pubs on the market in the latest phase of its £500m-plus sell-off programme.
M&B is looking to withdraw from the drinks-led market to concentrate on food-centred pubs. John Lovering, the former chairman at retail giant Debenhams, announced this refocus of M&B in March.
Sapient Corporate Finance, which acted for Ftse 250 group M&B on the sale, announced in the summer, of 333 "non-core" pubs, has been asked to market the latest batch, which should fetch more than £30m.
The pubs are known as the "franchise portfolio", though this is slightly misleading as they are in fact tenanted properties that are not part of an easily identifiable chain. M&B hopes to have sold them by the start of next year, though they will not necessarily go in a single transaction.
"These are rather large, rather nice, rather interesting pubs," said an industry source. "Obvious buyers would include the tenants themselves and M&B wouldn't do anything to discourage them from considering purchasing the pubs."
The process is about halfway completed, with private equity funds among the potential purchasers. The 333 pubs sold in the summer were brought by one such buyout group – TDR Capital. It paid £373m for the portfolio, which consisted of low-price, late-night high-street bars, such as the Scream chain beloved by university students.
CBPE Capital, another buyout group, helped fund AMF Bowling, to purchase rival Hollywood Bowl from M&B for £27m in August.
M&B is expected to update the market on the progress of its disposal programme in two weeks.
Mr Lovering has acted quickly to revitalise M&B since becoming chairman in January. In May, he impressed a dozen leading M&B investors at a dinner in Mosimann's private dining club in Belgravia, London, by outlining parts of his two-year corporate strategy.
He indicated he hopes to reinstate a dividend payment, possibly in these upcoming results. Just as importantly, he vowed to "normalise" M&B's divisive share structure.
M&B's share register is abnormally skewed towards two activist investors, Piedmont and Epsilon.
Mr Lovering believes that by bringing back a dividend payment the share price will rise, encouraging the two parties to sell at least part of their stakes at a strong profit. The dividend was scrapped in 2008 to save the indebted company £60m.
The scenario would be welcomed by other investors as it would increase liquidity in the business and not concentrate power in so few hands. One leading investor believes that 30 per cent of profit could end up being paid out in a dividend and also believes that Mr Lovering is aiming to get the share price back to a historically more typical level of around 500p.
M&B shares closed at 337.3p on Friday, down 5.3p on the start of the day's trading. This gives M&B a market value of around £1.4bn.
The group was founded in 1898 through the merger of two Midlands family businesses that specialised in breweries and pub estates. Today it is arguably best known for the stylish All Bar One chain, which is concentrated in London, where it has 22 branches.
The Independent on Sunday, p73
