Toothless sharks

17 March 2008 By John Foley Follow @johnsfoley

The UK pubs group, its share price laid low by a busted property punt, would once have been the ideal private equity target. But buyout firms are deprived of their traditional supply of cheap debt, so even such cashgenerative, propertyrich companies look rather hard to get.

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Blackstone and CVC are among the private equity firms considering an investment in Mitchells & Butlers, the UK pubs operator, according to people familiar with the situation. Among the options being considered are an equity stake, full takeover or a stake in Punch Taverns, the trade rival that has launched a cashandshares approach for M&B.

M&B's shares have fallen more than 60% since last summer, as plans to spin the group's £5bn of property assets into a joint venture unravelled. In January, the group said it had realised a £390m pretax loss by closing hedging positions linked to the failed joint venture. Its financial director resigned, and its chairman, Roger Carr, is to stand down in May.

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