One Punch shareholder has warned the board it will vote against the proposed merger with Mitchells & Butlers because it gives too much away.
Lars Bader, a fund manager with QVT, which holds 6.7% of the stock, said: "Punch is the most undervalued company in the world at the moment.
"Its share price represents only half what it is worth and this deal means we would be giving it away for free.
"If they could find debt to make this happen, that would be fine.
"But in the current form, it is not good enough."
Punch has tabled a plan which sees the shareholders of the two companies owning it on a 50/50 basis, with a £175m sweetener to M&B shareholders paid by Punch.
Analysts at Dresdner Kleinwort said last week: "This gives an equity split of 53% to M&B shareholders and 47% to Punch shareholders.
"The price looks relatively generous given we see few alternate bidders emerging and M&B contributes 40% of pre-synergy profit before tax."
Newspaper reports last week linked American private equity firm Blackstone with a bid for Mitchells & Butlers.
City rumours suggest Blackstone could team up with CVC Capital, the largest buy-out fund in Europe, to mount a cash bid for the managed operator.
Other rumours have suggested that Blackstone could join forces with a second largest American private equity firm KKR.
Some observers believe the current lack of cheap debt makes the deal very unlikely.
Others believe that it might be possible if private equity firms pool their resources.