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TCHENGUIZ BOARD ROLE PUTS M&B PROPERTY IN SPOTLIGHT

JP McManus and John Magnier have been buying stock in M&B

Monday May 19,2008

By David Shand

Mitchells & Butlers is poised to bow to pressure to consider unlocking value from its £6billion property portfolio by putting its biggest shareholder Robert Tchenguiz on its board.

The All Bar One and Harvester group is understood to be in talks to appoint the property entrepreneur or one of his representatives as a non-executive director.

A strategy update is due from the company tomorrow. alongside half-year figures.

Tchenguiz has built up a 27 per cent stake in the company, while Irish racing and property tycoons JP McManus and John Magnier have also been buying stock in a move that could have scuppered interest from private equity companies wanting to buy a big stake in the company.

Firms such as CVC and Blackstone had been in talks over several months to buy up to 25 per cent of the company in a deal which would have boosted M&B’s financial strength following a disastrous £390million loss on transactions relating to a property deal it was forced to abandon.

The equity injection would have enabled M&B to fund a deal to buy Spirit, the managed pubs business of rival Punch Taverns, with which it also held merger talks.

M&B refused to comment on speculation that Tim Smalley, an executive at Tchenguiz’s R20 investment vehicle, would be appointed to its board tomorrow. It also remained silent on whether its chief executive Tim Clarke would promise to further analyse the company’s portfolio with a view to separating property from its operating business.

Tchenguiz has also built a small stake in Premier Inn and Beefeater group Whitbread, prompting speculation he could try to bring the two companies together.

Taking a seat on the M&B board would place restrictions on his ability to trade the company’s shares. Mr Tchenguiz was unavailable for comment.

The property-value attraction of pub companies is back on the agenda after Enterprise Inns’ recent announcement that HM Revenue & Customs had given it the go-ahead to convert to a tax-efficient real estate investment trust (Reit).

It was a shot in the arm for a sector where trading has been hit by smoking bans and the consumer spending slowdown.

A property proposal and upbeat trading news could appease shareholders whose investments have more than halved in value in a year.