M&B shares dive after Lewis drops bid
Shares in Birmingham pub giant Mitchells & Butlers rapidly declined on the stock exchange after Tottenham Hotspur owner Joe Lewis pulled the plug on a potential multimillion-pound deal for the pubco. Shares dropped as much as 12 per cent at one stage after "weakness" in M&B's trade was highlighted as the main reason for the collapse of a potential deal.
Piedmont, Lewis' investment vehicle, shocked many in the market yesterday lunchtime (13 October 2011) by revealing it was dropping any potential bid for the pub group.
Mitchells & Butlers responded by saying it was not prepared to accept an offer, first touted by Lewis in September, of 230 pence per share which would have valued the business at £941m.
Its interim chairman Bob Ivell said: "The independent directors have been consistent in their view that an offer of 230 pence would substantially undervalue the company.
"We will continue to focus on our growth strategy for developing Mitchells & Butlers further as the UK's leading operator of restaurants and managed pubs creating value for all shareholders."
His comments came after the M&B share price dipped as low as 220 pence at one stage having ended at 255 pence the night before. After a bit of an afternoon recovery, the company closed with shares down 6.89 per cent on previous levels at 230.10 pence - its worst performance since May 2009 with its total stock now down 33 per cent this year.
A Piedmont spokesman told reporters: "Since we made our proposal economic conditions have deteriorated, market volatility has increased and M&B's trading statement suggested further weakness.
"The fundamental valuation and outlook is now more uncertain and clearly there is increased risk around the business."
Piedmont still holds a 22.8 per stake in M&B, which owns the All Bar One chain, but it is thought his move for the business failed in gaining support from Elpida, owned by Irish racing tycoons John Magnier and JPMcManus, which holds a 20.8 per cent stake in M&B.
Last month, M&B revealed that its total company sales for the year had dropped by 9.4 per cent though like-for-like sales increased by 2.7 per cent.
