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Mitchells & Butlers: the giant pub company with no one to call ‘time’

After numerous departures, a denuded M&B board looks most unlikely to stand up against a small group of powerful shareholders

Two months ago, the Deutsche Bank analyst Geof Collyer just about summed it all up: “The problem with Mitchells & Butlers [M&B] remains: who is actually running the company?”

The remark followed years of deteriorating relations between a gang of billionaire shareholders – who together speak for 43% of the pub company behind high street names such as Harvester, All Bar One and O’Neill’s – and independent directors on the board who had been seeking to ensure the firm was run in the interests of all shareholders, not just a select handful.

A ridiculous number of directors have come and gone, many blaming those troublesome major investors for making their role close to impossible. Then, last week, billionaire currency trader Joe Lewis, who already holds 23% of the company, intimated he was considering a nil-premium tender offer for the group. His move came at a time when the number of “independent” M&B directors is down to just three (I am excluding two boardroom representatives of billionaire investor Joe Lewis).

The Lewis offer is deeply unappealing, said those independent members of the board. But Lewis, who has parked his 220ft yacht outside All Bar One on Butlers Wharf, has not gone away. So, who are these remaining “independent directors” charged with protecting shareholder interests in the face of further takeover activity? Of the three, it emerged this week that one – Jeremy Blood, M&B’s caretaker chief executive – having found himself no longer working for Heineken two years ago, approached Lewis about funding for a putative new pub venture.

The approach went nowhere but within a few months Blood – at the instigation of Lewis – was appointed a director of M&B. “I’m no stooge,” he said at the time, and we must take him at his word. But it doesn’t look good that he has since sought to deny his past dealings with the Lewis empire, admitting them only latterly.

Also among the three declared independent directors is Bob Ivell, M&B’s interim chairman, who spent two years as deputy chairman of Next Generation racquet clubs, a private business owned for two years by investors including JP McManus and John Magnier. These two Irish tycoons, card-playing pals of Lewis, hold 20% of M&B stock.

Last of the three musketeers charged with defending M&B’s honour is new-boy finance director Tim Jones. He, at least, has no past connections to major shareholders, though he has only been at the company for 12 months. One early indication of the trio’s independence – or lack of it – may be the extraordinary free rein they have given in recent weeks to Ron Robson, one of Lewis’s appointees to the board.

As other independent directors have left the company, Robson has hoovered up powerful board roles and is now deputy chairman, and on the nomination, remuneration and audit committees. As if that were not concerning enough, he has also been almost permanently installed at M&B’s head office in Birmingham, supposedly advising Blood and other senior executives on how best to run the group.

This board is just not well enough equipped to deal with a predatory offer from Lewis and it is all too easy to see institutional shareholders being scared into selling out to him on the cheap. That would be nothing short of a scandal – and, barring a disagreement between the big investors, there looks no way to stop it. © 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