A picture of the Mitchells & Butlers logo

Information centre

Information centre story index


Mitchells & Butlers Property Joint Venture

In view of the prevailing conditions in the debt markets, the Board of Mitchells & Butlers has concluded that the joint venture proposal set out in the Company's announcement of 22 May is unlikely to be achieved until debt markets have improved.

Since 22 May, substantial progress has been made on structuring an attractive transaction, with terms largely concluded with R20 (the investment vehicle of Robert Tchenguiz), based on the sale of a 50% stake in a £4.5bn property joint venture comprising approximately 1,300 pubs and £240m of rent. Until the current market turbulence, Mitchells & Butlers and R20 have been in final negotiations with banks to finance the transaction. However, the Board believes that it is now not possible to execute the joint venture due to the current disruption of the debt markets which has resulted in a significant widening of credit spreads.

The Board continues to believe that such a joint venture structure would be the most advantageous method of releasing substantial value from the property portfolio for shareholders, whilst preserving the integrity of the proven business model. Discussions are continuing with R20 to enable the transaction to be implemented subject to debt markets improving.

To increase the probability of a successful transaction, Mitchells & Butlers and R20 separately entered into a number of debt hedging arrangements intended to be contributed to the joint venture in order to protect against potential increases in long term real interest rates. Due to recent market movements, Mitchells & Butlers’ share of these hedges, if valued on a mark-to-market basis as at 31 July, would have a post-tax deficit of approximately £60m. These hedges together would be used to underpin the financing of any joint venture.

A further announcement will be made as appropriate.

Current trading

Like-for-like sales for the 11 week period up to 28 July were up 3.5% on a same outlet basis and up 2.2% on an uninvested basis.

Although these results are, as expected, partly assisted by weaker comparatives within the Restaurant Division as a result of last year’s World Cup, they represent a resilient performance during a period of prolonged poor weather conditions. The underlying sales trajectory reflects a continuation of the consumer spending trends reported at the Interim Results on 22 May.

The first weeks of the smoking ban in England have seen minimal discernable impact on the overall sales trend, despite the sharply differing weather comparatives against last year. There has been a marginal movement in the sales mix towards food but this will also have been weather related. At this time, it is too early to draw any definitive conclusions from the limited period of the ban so far.

Overall, trading remains in line with the Board’s expectations.

For further information please contact:

Investor Relations:

Erik Castenskiold

0121 498 4907


Kathryn Holland

0121 498 4526

James Murgatroyd (Finsbury Group)

0207 251 3801

Amanda Lee (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 of three times the industry average.


Same outlet like-for-like sales include the sales performance for the comparable period in the prior year of all managed pubs that were trading for the two periods being compared. 85% of the estate is included in this measure.


Uninvested like-for-like sales include the sales performance for the comparable period in the prior year of those managed pubs that have not received expansionary investment of more than £30,000 in the two periods being compared. 75% of the estate is included in this measure.

Information centre story index