Piedmont Inc., the investment vehicle controlled by Bahamas-based billionaire Joe Lewis, said it hasn’t ruled out raising its offer for Mitchells & Butlers Plc (MAB), the U.K. owner of the All Bar One pub chain.
Shares in Birmingham, England based Mitchells & Butlers rose 9 pence, or 3.5 percent, to 269 pence at 10:20 a.m. in London, valuing the company at 1.1 billion pounds ($1.73 billion). Piedmont, which already owns 22.8 percent of Mitchells & Butlers, said three days ago it was considering an offer for the rest of the pub chain at 230 pence per share. Mitchells rejected the offer, saying it “significantly” undervalued the company.
“Piedmont reserves the right to increase its offer price above 230 pence per Mitchells & Butlers share, were an offer to be made,” said Piedmont in a statement today. “Piedmont wishes to clarify that it has not stated that it will not increase its offer price over 230 pence per Mitchells & Butlers share.”
Analysts including Nigel Parson at Evolution Securities and Greg Feehely at Altium Capital said any offer for Mitchells & Butlers would have to be pitched at least as high as 300 pence.
“Its a derisory offer,” Parson, who has a ‘buy’ rating on the stock, said in a phone interview. “Piedmont would have to pay in excess of 300 pence per share to value the business properly.”
Elpida Group, an investment vehicle owned by Irish horseracing tycoons John Magnier and J.P. McManus that owns a 20.1 percent stake in Mitchells, has yet to make a public statement on Piedmont’s possible offer. A spokesman for Elpida, who declined to be named, said he wouldn’t comment when contacted by Bloomberg News.
The company has lost four chairmen in the past 18 months. Piedmont has “exploited this instability,” David Cumming, head of U.K. equities at Standard Life said Sept. 13. Bob Ivell became interim chairman in July, replacing Simon Burke, who decided to step down. Burke was chairman from February and replaced John Lovering. Jeremy Blood became interim chief executive in March, replacing Adam Fowle.
Piedmont’s possible offer is “insulting,” Cumming said. “The business is worth substantially more than the terms proposed.” Standard Life holds 0.34 percent in Mitchells & Butlers.
Mitchell’s, which operates 1,600 sites in the U.K. including Harverster, All Bar One and O’Neill’s, is the “highest quality managed pub business in the U.K.,” Feehely, who has a ‘buy’ rating on the stock, said in a note to clients on Sept. 13. “We retain our view the shares are worth at least 300 pence.”
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