M&B: Buyout proposal undervalues company
The board of Mitchells & Butlers says a takeover proposal of 550pence a share from Robert Tchenguiz undervalues the business.
A statement released this morning says: "Mitchells & Butlers plc received a pre-conditional proposal last night from a consortium led by the Tchenguiz Family Trust.
The Board has reviewed with its advisers the proposal of 550p per share in cash.
The Board believes that this proposal undervalues the business and its prospects.
The proposal fundamentally fails to recognise the value and prospects of the company, which:
- has built the leading position in the rapidly growing pub food market with powerful brands and formats, serving some 80 million meals in the last year;- has delivered the fastest like for like sales growth in the pub sector over the past two years, with a further 4.1% increase in the first 29 weeks of this financial year;- has increased net retail operating margin* since 2003 despite significant external cost pressures through its focus on staff productivity, purchasing and efficiency gains;- has delivered over 20% p.a. EPS growth in the past two years and will deliver not less than 17% EPS growth in the first half of this financial year;- owns a unique estate of freehold assets in high quality locations; - has returned £642m to shareholders since demerger in 2003, in addition to ordinary dividends and has committed to return at least a further £500m in this calendar year (subject to market conditions) less any funds invested if a value creative acquisition opportunity is secured.
The Board believes that the Company has a proven, sales focused growth strategy, in a rapidly expanding eating out market, which is driving strong earnings growth, dividends and asset appreciation. This combines strong cash returns to shareholders with long term value creation. The Board believes that the Company has excellent prospects for organic growth and is well placed to take advantage of further consolidation opportunities. "
The saga of Tchenguiz' bid for M&B has been running for months and the Takeover Panel recently set a deadline of May 8 for a formal written bid.
