(Adds confirmation from M&B on talks, background, updates share
May 29 British pubs group Mitchells & Butlers
said on Thursday that it was in exclusive talks to
acquire a majority of the pubs owned by rival Orchid Group.
The operator of pubs such as All Bar One did not divulge any
additional details on the deal, but The Times reported late on
Wednesday that M&B had offered to pay more than 250 million
pounds ($418 million), outbidding private equity firms Colony
Capital and Starwood Capital.
The company is buying about 170 to 180 of Orchid's 220 pubs,
with the balance expected to be tipped into administration with
consultant EY, the newspaper reported.
M&B, which operates around 1,600 restaurants and pubs in the
UK, is understood to have offered 266 million pounds, although
the final price is likely to be about 256 million pounds after
adjusting for working capital in the business, The Times
"We believe the deal is a good one for M&B, at a price it
can comfortably afford," Numis Securities analysts said in a
note, adding that the deal could increase M&B's earnings by 7
percent to 9 percent.
The newspaper said M&B was thought to have offered about 10
million to 15 million pounds more than Colony Capital, the
underbidder, with Starwood Capital a little lower still.
British brewer Greene King pulled out of takeover
talks last week, saying the transaction did not meet the
company's strict acquisition criteria.
Orchid is owned by a trust linked to Deutsche Bank
Shares in Mitchells & Butlers were up 1.9 percent at 412.6
pence at 0911 GMT on the London Stock Exchange.
($1 = 0.5986 British Pounds)
(Reporting by Aashika Jain and Roshni Menon; Editing by Steve
Orlofsky and Gopakumar Warrier)