Mitchells & Butlers in talks to buy Punch's Spirit

14-04-2008

Mitchells & Butlers in talks to buy Punch's Spirit
Pub operator Mitchells & Butlers (M&B) has confirmed it is in talks to buy part of rival Punch and could raise the finance needed by selling off a minority stake to a private equity firm.

M&B said it has received several offers from private equity investors to take a minority interest in Mitchells & Butlers "at a material premium to the current share price".

The company added it has initiated an approach to Punch, which owns over 8,400 pubs across the UK, to explore the terms of a potential acquisition of the company's Spirit division.

In a statement, M&B said: "The board believes that significant value through enhanced sales and profitability can be created by integrating Punch's managed pub business into Mitchells & Butlers operational and brand structure.

"The board has now initiated an approach to Punch to explore whether terms for such a mutually beneficial transaction can be agreed."

Managed outlets are wholly owned and operated by Punch through its managed division, Spirit Group.

M&B, which runs All Bar One and O'Neill pubs, added any cash-raising deal would be purely to fund a possible acquisition – the company has no requirement for any capital injection to meet its existing funding needs.

Birmingham-based M&B lost £274 million last year as the credit crunch hit a debt-financed property deal.

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