Friday 28 March 2014

Fancy a pint?

Am I the only person to have noticed that pub companies Mitchells & Butlers and Greene King are currently trading on the stock market with almost identical market capitalisations?

There is a reason I am (unsubtly) attempting to point this out. A few days ago an excellent source mentioned to me that both companies had recently been chatting about combining to create a £4bn business that would go into London's blue-chip index. Apparently, bankers from Deutsche Bank - an advisor to Greene King - were trying to engineer the merger deal.

I know this is a bit of an old chestnut of a deal story that goes around the market every six months or so but I have taken it seriously as my source has a strong track record of giving me accurate scoops.

So, I checked out the tale with Mitchells & Butlers and Greene King. Both companies declined to comment. However, "people close to the situation" downplayed the gossip, saying that as far as they are aware, there is nothing going on.

These "people" also pointed out that financial public relations firm Finsbury, which has advised Mitchells & Butlers for several years, had recently picked up the mandate to advise Greene King. Given Finsbury was recently appointed as PR advisor to both companies a deal is unlikely to be in the offing, these "people" implied.

Still, now does appear to be the right time for a merger of equals and I trust my source.

And for some of Mitchells & Butlers largest shareholders - such as Joe Lewis, who controls Tottenham Football Club - a merger would give them smaller stakes in a bigger, more liquid company.

I'm off to the pub.....

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