As three of Mitchells & Butlers’ biggest shareholders take control, Dominic Walsh wonders how they were allowed to proceed by the Takeover Panel without having to make a mandatory bid

It seems pertinent to ask how it is that three of the biggest shareholders in Mitchells & Butlers could get their three-card trick past the Takeover Panel. Piedmont, controlled by Spurs owner Joe Lewis, along with Elpida – an investment vehicle of the racing tycoons JP McManus and John Magnier – and Smoothfield Holding, held by their friend and business associate Derrick Smith, managed to persuade the Panel to let them pool their holdings into a single 55% stake without having to make a mandatory bid.

All of which means the four men, members of the so-called Sandy Lane set, are being handed control of one of the country’s best pub companies without any kind of takeover premium.

There are bound to be shareholders who are less than enamoured by the turn of events. Although M&B will remain a public company, its new majority shareholders – collectively Odyzean Group – have made clear that they’re the ones now calling the shots both financially and operationally. Areas mentioned where they intend to dictate strategy and policy include dividends, board appointments, remuneration, pub investments and acquisitions.

In some ways, this is quite a shocking turn of events, but M&B shareholders with long memories should not have been too surprised at the three men joining forces in the mother of all concert parties. The concept of a concert party has come up before. In 2011, after Piedmont had made a bid approach for M&B, Elpida and Smoothfield were put under pressure from the Panel to clarify their position and they were forced to admit they were acting as a concert party.

Although there was no suggestion that Piedmont was working with Elpida and Smoothfield, only 18 months earlier M&B had responded to a boardroom coup at the company by asking the Panel to investigate whether Messrs Lewis, Magnier, McManus and Smith were acting in concert. No such evidence was found, although suspicions persisted.

Not that taking control comes cheap. The concert party are having to stump up 55% of the £351m being raised by M&B to ensure it makes it through the pandemic – some £193m – and the final total could be higher as they’ve also underwritten the rest of the equity raise.

With hindsight, the week between the first announcement of the creation of Odyzean and the launch of the share offer was the opportunity for disgruntled shareholders to get out without having to shell out for new shares or see their stakes diluted.

As I’ve already mentioned, the Odyzean crowd have been crystal clear they’re now pulling the strings. Then again, any shareholders who decided to keep their shares as minorities might not be able to keep them for long. What was not mentioned by the concert party was the possibility of completing a full takeover of M&B, even though such an outcome remains a racing certainty.

Cost of cancellation

Last week was half-term, which meant the Walshes staycationing on the Norfolk Broads. Or not. The current lockdown put paid to our week of playing Scrabble or Monopoly in front of a roaring fire, walks on the beach and eating out in a variety of (mainly) excellent pubs and restaurants.

All of which got me thinking about the economic impact of the cancellation of our week away. Not on my wallet, which ended the week almost as full as it started, but on Norfolk’s hospitality industry.

Let’s start with the £662 East Ruston Cottages would have collected for accommodating the four of us (or six including our two cocker spaniels) for the week in a delightful converted barn. Then there’s the £150 spent on groceries from the supermarket, the daily copy of The Times and Telegraph (only for the easier crossword, you understand) from the local newsagent and delicious pâtés and pies from the local butcher.

No visit to North Norfolk would be complete without a trip to No1 Cromer for a lunchtime visit to the posher upstairs restaurant for dressed Cromer crab or some of the best cod and chips I’ve eaten. The bill for lunch? Call it £175.

On top of that, there are the pub lunches – three of those at £100 a time – and the coffees, hot chocolates and slabs of cake at beachside cafés, adding perhaps another £75 to the bill for the week. Throw in the odd extra bottle of wine and perhaps three trips to the baker and I wouldn’t be surprised if the total amount of cash that failed to make its way into local coffers last week came to the best part of £1,500. Not an enormous sum (Norfolk is wonderful value for money), but multiply that by the myriad holidaymakers who would normally visit and you can see the scale of the gaping hole in the area’s economy created by the pandemic.

Hospitality at home

It’s amazing the changes that are taking place in the hospitality industry as operators seek ways of bringing in much needed cash and seek to reposition their businesses for the new normal (whatever that may be).

One of the most interesting trends is that of restaurants, from casual dining chains to Michelin-starred establishments, selling ingredient boxes or pre-prepared chilled dishes direct to the consumer.

Côte was an early adopter, with its Côte At Home concept offering a mixture of chilled dishes from the restaurant menu and high-quality meat and other produce ready to cook to set instructions. Other chains include Franco Manca and TGI Fridays.

Higher up the scale, fine dining outfits like Haar, in St Andrews, are sending out luxury boxes containing items such as lobster, crab, steak, chocolate desserts, champagne and even ready-to-drink cocktails. So successful has it been that chef director Dean Banks, a MasterChef finalist who in March last year didn’t know if his restaurant would survive let alone be able to keep existing staff on, has ended up taking on extra staff to cater for demand for Haar At Home.

The latest company to dip its toe in the water is Fuller’s, which is launching a Fuller’s At Home box for Mother’s Day, providing an oven-ready three-course lunch and bottle of Laverstoke fizz at £120 for four people. I’m assuming this is being used to test an expanded, possibly permanent, Fuller’s At Home service.

Just one thing, guys. A bit more imagination on naming these operations might be in order. Then again, At Home does what it says on the tin.