Lewis mulls Mitchells takeover bid

Pub giant Mitchells & Butlers could be snapped up by activist investor Joe Lewis after he today said he is mulling a £941.8bn bid.

Mr Lewis’s investment vehicle, Piedmont, revealed it has had an offer to buy the 77 per cent of the company it does not already own turned down.

The pubco’s biggest shareholder said it is now considering a higher bid for the company, which operates 1,600 sites in the UK including Harvester, All Bar One and O’Neill’s, at 230p per share.

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Piedmont, which made the announcement after shares rose seven per cent today amid speculation about the move, did not reveal the value of its original offer.

Mitchells has seen been hit by the slowdown in consumer spending and the squeeze in the pub sector in recent years, which has prompted boardroom turmoil.

Its share price has fallen from about 900p in 2007 to just over 200p in recent weeks.

Bahamas-based Mr Lewis, who was born above a pub in the East End of London, bought his shares in October 2008 for about 130p from property tycoon Robert Tchenguiz.

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He is believed to have had a fractious relationship with the management.

The company is currently being run by an interim chief executive and chairman after Simon Burke resigned as chairman in July and chief executive Adam Fowle announced his shock departure in March. Mr Fowle had been at the helm for less than two years and Mr Burke took up his role just six months previously.

Mitchells recently reported that like-for-like sales had slowed to 2.8 per cent in the nine weeks to July 16, down from 3.3 per cent in the previous 33 weeks.

But underlying sales growth was more like 1 per cent, it said, because the most recent period was against weak comparatives a year ago, when the World Cup encouraged people to abandon its food-led-pubs for venues that were screening the matches.

Mitchells also warned that its profit margins were being squeezed as it put on more special offers to attract cash-strapped consumers and it struggled to pass on rising costs.

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