Tuesday 21 November 2017

Shares in M&B rise on rumours of Magnier-McManus takeover


John Mulligan

John Mulligan

IRISH horseracing tycoons John Magnier and JP McManus are rumoured to be plotting a £1.7bn (€1.9bn) takeover of UK pub group Mitchells & Butlers -- just over a year after telling shareholders they had no interest in controlling the company.

They currently own just over 20pc of Mitchells & Butlers (M&B) -- of which former Superquinn boss Simon Burke is the chairman -- having accumulated their stake since 2007.

Mr Magnier and Mr McManus have made two large share purchases so far this year, increasing their holding -- which is held via an investment vehicle called Elpida -- from 17.6pc to 20.3pc. It is currently worth about £272m (€305m).

It is rumoured that the pair have joined forces with the Bahamas-based British billionaire Joe Lewis to mount a bid for the listed group, one of the largest pub chains in the UK with roughly 1,500 outlets that trade under names such as O'Neill's and Harvester.

Lewis stake

Mr Lewis owns almost 23pc of M&B, having acquired that stake from the London-based property mogul Robert Tchenguiz in 2008, using his Piedmont vehicle.

Mr Tchenguiz was a major client of the failed Icelandic bank Kaupthing.

It has been speculated that the Irish investors and Mr Lewis have also seduced a major private-equity group -- possibly Kohlberg Kravis Roberts -- to back them in their takeover bid.

Shares in the pub chain jumped 3.7pc yesterday as speculators bet that the trio would soon make a move.

Neither Mr McManus nor Mr Magnier were contactable yesterday, while representatives for Mitchells & Butlers didn't respond to inquiries.

M&B's recent colourful past was highly destructive for the group. In early 2009, it revealed a £500m loss due to a failed derivatives bet, undertaken at the behest of Mr Tchenguiz.

Later that year, a bitter feud erupted between some board members and investors, including Magnier and McManus, while Joe Lewis accused M&B of failing its shareholders.


Four non-executive directors, including former EU commissioner Ray MacSharry, were removed from the board. Mr MacSharry later received an apology from M&B, saying it regretted the manner in which his appointment had ended.

The Takeover Panel in the UK also ruled that Elpida and Piedmont were not working in concert to frustrate executive management decisions, while the investors succeeded in having then chairman Simon Laffin ousted from the board.

At the group's AGM last year, Elpida representative Ed Banks, a senior managing director at Evercore Partners, told shareholders: "Elpida does not want to control this company. We just want to see it run better. All of us will benefit equally from that."

Mr Banks declined to comment when contacted yesterday.

Last month, M&B reported sales of £912m (€1.02bn) in its first half, a 4.2pc rise, and a 1pc increase in earnings before interest, tax, depreciation and amortisation to £194m (€217m).

Irish Independent

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