Page last updated at 06:28 GMT, Monday, 14 April 2008 07:28 UK

M&B eyes Punch pub chain Spirit

Drinks being served at All Bar One branch
M&B owns the All Bar One and Harvester chains

Pub group Mitchells & Butler, owner of the All Bar One chain, is in talks with ex-suitor Punch Taverns about taking over the latter's managed pub division.

M&B, which held merger talks with Punch earlier this year after putting itself up for sale, now wants to buy Punch's managed pubs arm Spirit.

M&B has now "initiated an approach to Punch" to see if a "mutually beneficial transaction can be agreed".

It is also talking to private equity investors about funding any deal.

"One form of funding being considered is the basis on which the private equity investors, who support Mitchells & Butlers strategy of consolidation, might invest in the company," an M&B statement said.

"Any transaction structure and financing will be assessed by the board in the light of creating value for all existing shareholders and will be subject to any necessary shareholder approvals."

Property deal

M&B said that talks were only at a preliminary stage and that there could therefore be no certainty that any transaction would be concluded.

In late March, Punch withdrew its proposal to merge with M&B, saying that the terms of its offer, made in February, were no longer in the best interests of its shareholders.

Punch had 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.

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