Robbie's return

14 Mar 2006 By John Foley Follow @johnsfoley

The property tycoon will struggle to drive much value from the UK pub operator beyond piling on debt. In the meantime, Mitchells & Butlers has strong organic growth and consolidation potential. Its owners may drive a hard bargain.

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Shares in Mitchells & Butlers rose 19% after R20, the investment vehicle of Robert Tchenguiz, said it had been discussing a possible consortium bid for the UK pub group. The shares closed at 490p, valuing the group at £2.5bn.

Mitchells & Butlers has around 2,000 pubs, including the All Bar One and O'Neills chains. An estimated 90% of them are freeholds, and around half have been securitised.

Tchenguiz, who already owns roughly 900 pubs through his vehicles Laurel and Globe, is thought to have lost last year's auction for Spirit, which went to rival group Punch for £2.7bn. The price was equivalent to 11 times ebitda, including costs and pension contributions.

In response to Tchenguiz's interest, M&B said: These discussions are at an early stage. As a result there can be no certainty that an offer will be made. Should details of any offer be forthcoming, the Company will make an announcement as appropriate.

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