Punch Taverns cancels M&B merger

M&B owns the All Bar One and Harvester chains

Punch Taverns has withdrawn its proposal to merge with troubled pub firm Mitchells & Butlers, owners of the All Bar One chain.

Punch said the terms of its offer, made in February, were no longer in the best interests of its shareholders.

It has been approached by other parties about the possibility of making another offer for Mitchells & Butlers, it said.

Under City rules, this would have to be on less favourable terms than Punch Taverns' first proposal.

Punch proposed paying Mitchells & Butlers' shareholders £175m for the company.

In addition, both companies' shareholders would have owned 50% of the merged company, "and would therefore equally participate in the benefits of the combination," Punch said in a statement in February.

Mitchells & Butlers became vulnerable to takeover after losing £274m through a collapsed property deal.

Smoking ban

Fellow pub operator the Laurel Pub Company, which runs the Slug and Lettuce chain, went into administration on Thursday after it failed to find a buyer for its 90 loss-making bars.

It is understood to have been hit hard by high rents and the ban on smoking in pubs.

All of the group's 378 sites, which also include Yates's chain, were handed over to the administrators.

But almost immediately, the bulk of the properties were bought back in a deal financed by their billionaire owner, property entrepreneur Robert Tchenguiz.

The pubs will now be operated by two different companies, the Town and City Pub Company and the Bay Restaurant Group.

Another pub firm, Enterprise Inns, which runs 7,000 drinking establishments, said on Friday the smoking ban was having a "particularly adverse impact" on its pubs that don't serve food.

But it said it was optimistic that the smoke-free atmosphere would attract new customers.