Mitchells & Butlers confirms asset talks with R20

Mitchells & Butlers (M&B) stopped short of revealing detailed plans for its property assets this morning.

Industry observers and investors had been expecting M&B to lay out how it would satisfy major shareholder Robert Tchenguiz, who wants the pubco to spin off a large part - or even all - of its £5.5bn property portfolio, when it announced its interim results today.

Instead M&B said it was "exploring the possibility of a 50:50 joint venture covering the majority of our property assets with R20, the investment vehicle of Robert Tchenguiz, which has emerged as the most competitive bidder at this time.

"There can be no certainty that any transaction will be forthcoming, with significant work still required before a successful conclusion can be reached. A further announcement will be made in due course as appropriate."

Tim Clarke, M&B's chief executive, told thepublican.com​ that there was still "a lot of work to do" regarding the discussions and that it was "impossible to predict" when details of the property joint venture with Tchenguiz's R20 group would be revealed.

"We said all along that we would be announcing the conclusions of our review and we believe we've done that pretty powerfully with this statement," he added.

Since his bid for the group was rebuffed last year, Tchenguiz has been agitating for M&B to release value from its pub assets. Recent press reports have suggested a joint venture sale and leaseback deal was being lined up and would be announced as M&B reported its half year results.

As for the group's results, overall turnover for the 28 weeks to April 14 2007 rose 12.2 per cent to £995m, with pre-tax profit down 2.2 per cent at £89m.

Pre-exceptional earnings per share rose 15.6 per cent to 14.8p, with the interim dividend up 16 per cent to 4.25p.

Like-for-like sales were up 3.6 per cent and market share gains were seen in food and drink sales, Clarke said.

More than half of the 239 pubs acquired from Whitbread had reopened following conversion to M&B outlet brands, Clarke, added, with all seeing a 25 per cent sales uplift. All the Whitbread pubs will have been converted by next Easter, he noted.

In Scotland, the group said its same outlet like-for-like sales to 12 May 2007 were "cumulatively ahead since the ban by 1.8 per cent, with food up 7.4 per cent and drinks down 0.4 per cent".

Analysts said this boded well for the overall trade south of the border, once the English smoking ban kicks in on July 1.