Takeover rumours for Irish tycoons

IRISH financiers John Magnier and JP McManus are being linked with a takeover bid for the British pub group, Mitchells & Butlers (M&B), which could value the business at more than £1.7 billion (€1.9bn).

The horseracing tycoons already own a 17%-plus stake in the group, through their Elpida investment vehicle, and are now being linked with a complete takeover bid — along with private equity house Kohlberg, Kravis & Roberts (KKR) and fellow M&B shareholder and British financier Joe Lewis.

The heavily rumoured £4.25 per share bid would value M&B at more than £1.7bn. Mr Lewis currently owns a near 23% stake&.

Last year, Mr Lewis — M&B’s largest individual shareholder — led a heave on the existing management at the group, leading to the removal of the then chair-man, his initial replacement, the chief executive, the finance director and two non-executive directors.

Shares in M&B — which owns All Bar One and the Irish-themed O’Neill’s, as well as many other British pubs — were trading at £3.32 yesterday afternoon; up by over 12p and nearly 4% on Monday’s close.

Although no comments were forthcoming from the Magnier/McManus camp, nor the group itself, British-based analysts are taking the media speculation seriously — with some noting that KKR was heavily linked with a bid for M&B just over three years ago.

But while the broker community view a deal as being plausible, some argue that the pub group’s £400m pension deficit could prove a stumbling block.

Last month, M&B published a strong set of first half results for the six months to the second week of April.

The figures showed a 4.2% year-on-year rise in revenue to £912m and a 1% increase in earnings before interest, tax, depreciation and amortisation to £194m, adding that it had reduced its net debt by nearly £400m.

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