Talks over merging Stonegate Pub Company with Town & City Pub Company are making very slow progress, sources indicate, writes Paul Charity. Stonegate, backed by private equity firm TDR Capital, completed the acquisition of 333 Mitchells & Butlers wet-led pubs over the weekend. Stonegate’s chairman Ian Payne is also chairman of Yates’s operator Town & City and a merger of the two wet-led operators has been mooted. Sources suggest that the Icelandic bank Kaupthing, which owns Town & City Pub Company alongside Commerzbank, is proving a little unrecepive to the merger idea. A source said: “It’s still an opportunity waiting to be done but in all honesty it’s very hard to call (whether a deal can be done) - it’s certainly very far from being complete (at the moment).” Ian Payne is filling the de facto role of executive chairman at Stonegate while talks about a possible merger with Town & City Pub Company are “on-going”. There is an agreement in place for M&B to provide transitional management for nine months after. Pub managers at the 333 pubs attended one of three roadshow meetings with Stonegate management last month to discuss plans for the future. The source continued: “The meetings went very well - the managers are all very keen. There’s a feeling that they’ve been slightly “out of it” at M&B because their pubs are wet-led.” Kaupthing is still the largest shareholder in Town & City with Commerzbank — the main debt provider to the business — holding about 30% of the equity. Stonegate was acquired by TDR Capital out of it own funds with bank finance to be sought later.