QVT, the hedge fund that has spoken against a merger of Punch Taverns and Mitchells & Butlers, has again increased its stake in Punch.
The US-based investor now owns 8.7% of the leased and managed pub group led by Giles Thorley.
Lars Bader, fund manager at QVT, recently said that the only shareholders who would consider the merger were those that were investors in both companies, and that the deal’s dilutitive impact held no logic for shareholders only invested in Punch.
Bader said that the synergies available – thought to be at least £50m – were not enough to justify the transaction.
He said: “It makes no sense to me. The only reason it has any momentum at all is because there are overlapping shareholders. Any shareholders who don’t own M&B should take a careful look at this and make their views known.”
Bader said his company believed Punch was significantly undervalued. He said: “Its share prices represents only half of what it is worth, which means you are paying twice as much as you should be (for the M&B deal).”
Punch has put forward a plan to merge with M&B, a deal that would include a sweetener payment of £175m to shareholders. An enlarged group would comprise about 7,500 leased pubs and almost 3,000 managed houses.
M&B was effectively put in play after the board announced a strategic review. This was launched following pre-tax losses of almost £400m from the closure of hedging positions taken out against the aborted £4.5bn property deal with Robert Tchenguiz’s R20.
