Joe Lewis, the British billionaire who lost more than £500m on investment bank Bear Stearns, has emerged as the buyer of Robert Tchenguiz’s 25% stake in Mitchells & Butlers (M&B).
According to The Times newspaper, Lewis – a Bahamas-based tax exile with investments in companies including Ladbrokes and Tottenham Hotspur Football Club – is understood to have bought 105 million shares at 130p, putting his investment at £137m.
The billionaire has close links to John Magnier and JP McManus, the racing entrepreneurs, whose Elpida vehicle has about 10% of M&B.
The sale of the stake brings to an end Tchenguiz's attempts to use his holding to unlock value from M&B's underlying assets, although he is understood to retain an interest of more than 4% through derivatives known as ‘contracts for difference’.
Tchenguiz recently saw two of his main dealmakers at R20, Aaron Brown and Tim Smalley, join the M&B board. They are expected to step down once the stake sale is confirmed.
The entrepreneur was forced to sell the holding as a result of the woes of the Icelandic bank Kaupthing. Tchenguiz had lodged the shares with the bank as collateral against loans, but Kaupthing has been seeking to repatriate cash to shore up its precarious position.
The forced sale at 130p a share will be a painful blow as Tchenguiz is understood to have paid an average of about 500p a share. That would equate to a loss on his investment of about £390m, said The Times.
Despite his failed Bear Stearns gamble, Lewis has according to analysts proved a shrewd investor, ready to use his resources to take positions in companies that had seen sharp share falls.
Lewis, who was born above a pub in Bow, East London, made his first fortune in the family catering business, Tavistock Banqueting, which he joined as a waiter after leaving school at 15. After selling out he became a currency trader, and reputedly made a killing on Black Wednesday in 1992.
Despite the big loss on M&B, Tchenguiz is understood to remain solvent, albeit with a much reduced personal fortune. Focus has inevitably turned to his other links to Kaupthing, which has backed a number of his past deals, with debt and equity.
The Icelandic bank has debt and equity in the Bay Restaurant Group, which runs the Slug and Lettuce and La Tasca chains, and Town & City Pub Company, which operates about 160 high street bars, most branded as Yates's.
Tchenguiz also holds 10% of J Sainsbury, which has seen its shares fall sharply in recent days on fears that he might have to offload the holding.
Shares of M&B fell by 2.5p to 161p this morning, while Sainsbury's was down 28.75p to 286p, a fall of more than 9%.
