Mitchells & Butlers Pressured to Spin-off Of £5.5 Billion Pub Portfolio

The Telegraph - March 19, 2007

Robert Tchenguiz, the property tycoon, has made preparations for a hostile bid for Mitchells & Butlers if the pub chain's chairman, Roger Carr, does not bow to his demands to spin off its £5.5bn property portfolio.

Carr has promised a decision on whether to separate the property into a real estate investment trust (Reit) when the company presents its results in May and Tchenguiz is not expected to move until then.

Last month Tchenguiz increased his personal stake by nearly 3 per cent to 16 per cent and many of his friends and family are thought to have bought in on his coat-tails in the expectation of taking a big profit if he wins the battle to get M&B's property empire spun off.

Legislation providing for Reits - a form of highly tax-efficient property investment trust - came into force at the beginning of the year and since then 14 companies have converted to Reits. However, only property companies have converted so far and any move by Mitchells & Butlers could encourage other non-property businesses to make a similar move.

A source close to Tchenguiz said: "The real interest is to work with the company on any deal. It is an attempt to recreate the deal without private equity - to break up the company into an operating company and a property company and do it in a way where shareholders remain shareholders in the operating company, but get the benefits of the private equity strategy. Sphere: Related Content