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Irish support could seal Mitchells & Butlers’s fate

Lewis is an opportunist, as currency traders tend to be, and M&B’s rudderless state is a chance to make money

Mitchells & Butlers has had 34 changes of director in three years so it will be no surprise if the pubs group’s trading has gone flat. But it’s rich for Joe Lewis to grumble about a lack of firm management: the source of much of the upheaval in the past 18 months has been Piedmont, Lewis’s investment vehicle, owner of 22.8% of the shares.

Piedmont, it should be said, offered some semi-reasonable arguments when its rebellion succeeded in throwing out half the board in January last year. But the stability this revolution was supposed to inspire hasn’t materialised. Of the supposedly crack team of four non-executives that was installed on Piedmont’s prompting, only one remains. He is Jeremy Blood, who has been obliged to step behind the pumps as “interim” chief executive serving alongside an “interim” chairman in Bob Ivell. The place reeks of instability.

Lewis’s proposal is to bid for M&B, but at such a lowball price that Ivell, Blood and finance director Tim Jones, the only independent directors, can’t recommend surrender. Lewis is offering only the market price, and no self-respecting director can support that. An “insulting” offer, said David Cumming at Standard Life – he’s right.

Conspiracy theorists argue that Piedmont has generated the upheaval to grab M&B on the cheap. That idea is too simplistic. Rather, Lewis is an opportunist, as currency traders tend to be, and M&B’s rudderless state is a chance to make money. Several ingredients are there: a decent estate of pubs, demoralised shareholders and a lack of obvious counter-bidders.

The uncertain element is the Irish. If Elpida, the vehicle through which JP McManus, John Magnier and others own 20% of M&B, supports Lewis’s lowball offer, M&B is as good as sold.

Outside shareholders, if they really want to resist Lewis (or just make him pay a fair price), should concentrate on forcing Ivell to find credible executives who want to do the job. They’ve been making that point a while but it’s time to get serious. If not, there’s a sizeable risk that M&B, a decent company with potential to prosper again, will be towed away on the cheap by Lewis in his big yacht. © 2011 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds