Mitchells & Butlers is reportedly considering asset swaps and a range of property disposals as part of a strategic review announced following the company’s £275m post-tax hedging loss.
The Telegraph reports that M&B, which last week received an £11bn merger proposal from Punch Taverns, is understood to have told advisers at Citi and Greenhill that there should be "no sacred cows" as it seeks solutions which produce "deliverable best value" for investors.
M&B will consider swapping assets, which could include attempting to strike a deal with Whitbread to exchange M&B’s budget hotels for some of Whitbread's pubs.
Outright disposals could include some of the group’s high street, leasehold operations such as All Bar One, Brown’s and O’Neill’s.
Punch’s merger proposal is said to have received a mixed reaction from shareholders.
The views of hedge fund Marshall Wace, which owns about 6% of both M&B and Punch, are unclear. It emerged this weekend that Trevor Hemmings, the owner of the Blackpool Tower, Trust Inns and Herald Inns & Bars, has built a 3% stake in M&B through a family-owned trust.
Private-equity groups are also thought to be looking at M&B. Blackstone and CVC Capital Partners are understood to have linked up to work on a possible bid. They are understood to have asked Lehman Brothers to advise them.
There is some uncertainty as to whether private-equity firms can mount a credible challenge to a formal bid from Punch because of the difficult debt markets. Punch is being advised by Goldman Sachs and Morgan Stanley.
Despite the hedging losses at M&B, which were put in place ahead of the aborted £4.5bn property deal with Robert Tchenguiz, its underlying business is performing well. As a result, M&B insists that its strategic review should not be seen as a "distressed sale".
Tchenguiz, who owns more than 23% of M&B, will play a key role in the outcome of any deal. He is understood to be willing to raise his stake in the group to 29.9%, the maximum before a formal takeover offer would be triggered.
