A low-ball approach for pub group Mitchells & Butlers – a nil premium to the closing price on 26 August of 224p – highlights a genuine conundrum for shareholders.
On the one hand, the initial approach from Monaco-based billionaire and 23 per cent M&B shareholder Joe Lewis looks derisory; as does the 230p to which he is considering increasing the offer.
But were Mr Lewis's bid to fail without the appearance of a rival bidder, shareholders would face the unpleasant prospect of continued boardroom turbulence coupled with the possible onset of a trading downturn, as consumers' disposable incomes are eroded. We recently retracted all our buy recommendations on stocks in the sector, due to our fears of a trading downturn coupled with cost increases.
