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31/07/2008

Mitchells & Butlers plc to acquire 44 pub restaurants from Whitbread PLC in exchange for 21 Express

Following Mitchells & Butlers' stated intention to create additional value from its non-core assets, a swap of lodge assets for pub restaurants has now been agreed with Whitbread. 

Under the terms of the agreement, Whitbread will acquire 21 of Mitchells & Butlers' lodge sites (1245 rooms), currently trading under the Express by Holiday Inn brand, in exchange for 44 standalone Whitbread pub restaurant sites, currently trading under the Brewers Fayre and Beefeater brands.  The exchange has been made on the basis of equivalent EBITDA of circa £9m from both the hotels and the pub restaurants and a valuation of circa £78m for both sets of assets to be exchanged.  

These high quality pub restaurant sites will be converted to Mitchells & Butlers' industry leading brands and formats with significant sales and profits uplifts expected.  The transaction is expected to complete on 19 September 2008.  In order to assist in funding the capital expenditure required for the conversions and to further reduce group debt levels, we intend to review opportunities for sale and leaseback financing on these acquired freehold sites.  This would demonstrate the value of the properties acquired, in addition to the value that will be created from the operational profit uplifts generated by the brand conversions.

We will also continue to actively pursue the creation of additional value from our other non-core assets, including the Innkeeper's Lodge units. 

Commenting on the deal, Tim Clarke, Chief Executive of Mitchells & Butlers, noted:

"This deal drives further consolidation in top end managed houses and demonstrates our ability to create value from the non-core assets.  Our brands can add a lot of value to these pub restaurant sites as we have shown with previous acquisitions."

For further information, please contact:

Investor Relations:
Matthew Bates
0121 498 6513

Media:
James Murgatroyd (Finsbury Group)
0207 251 3801

Notes for editors:

- Mitchells & Butlers owns and operates around 2,000 high quality pubs in prime locations nationwide.  The Group's predominantly freehold, managed estate is biased towards large pubs in residential locations.  With around 3% of the pubs in the UK, Mitchells & Butlers has 10% of industry sales and average weekly sales per pub over three times greater than that of the average UK pub.

- Mitchells & Butlers' leading portfolio of brands and formats includes Ember Inns, Harvester, Sizzling Pub Co., Toby Carvery, Vintage Inns, All Bar One, O'Neill's, Nicholson's and Browns.  In addition, Mitchells & Butlers operates a large number of individual city centre and residential pubs.

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