By Peter Martin

It looks only a matter of time before Wolverhampton & Dudley Breweries is bought. On Friday the W&D board rejected an initial offer from Robert Breare's Noble House Leisure group and its venture capital backers Botts & Co. But City sentiment and the day's resulting fall in its share price suggest that investors want a deal.

W&D's shares climbed from 355p at the beginning of last week, before the Breare approach, to begin trading at 482.5p on Friday, equivalent to a market value of £455m. They subsequently fell back to 451p. Observers believe Breare and supporters are offering a cash price of around 500p, or £566m.

Breare and Botts are this week expected to return to the fray by revealing details of their offer and appealing direct to shareholders. They, however, are not the first to approach the troubled W&D management about a possible sale. Alchemy Partners, for one, is known to have made a tentative private approach.

Breare is the first to go public in the hope of flushing out a resistant board. But the move may also bring out rival bidders.

W&D's options are to start talking to Breare, hang on for a better offer, find a white knight that will back a management buy-out or try to fight it out. City support for the last option is expected to be thin, and the board has a duty to maximise shareholder value, and that now looks best served by a sale.

By buying up both the rival Martson's and Mansfield brewery groups, W&D saw itself becoming the first of a new-breed of "super regional" brewer. The simple flaw with that strategy is that it is built on an out-of-date view of the industry, based on traditional brewer vertical integration, with a mixed estate and the imposition of the tie.

The rule today is to keep it simple and focused. W&D is too complex a business for its scale. The likely future for W&D, no matter who is the eventual owner, is a break-up:

• a sell-off of branded operations centred on Pitcher & Piano, still one of the high street's star concepts;

• a sell-off and rationalisation of the brewing business - Marston's brewery and the Pedigree brand remain prime assets;

• a more aggressive topping and tailing of the remaining pub estate, with more bottom end disposals and more middling managed pubs converted to tenancies - and then securitisation.

What also looks certain is that this is the end for W&D boss David Thompson, who may now go down in history for killing off not just one but three great old regional brewers.

• Wolves û what the media and City say (see below)

• For background on last week's bid news go to the Week 32 Archive