Mitchells & Butlers plc(the 'Company')
Annual General Meeting
The Association of British Insurers ('ABI') wrote to theCompany last week on behalf of its members in their capacity as institutional investors. The letterstated that a compromise agreement with PiedmontInc.would be acceptable,even though it would mean the Company sacrificing some key governance principles. The letter added that a benchmark for such a compromise could be the arrangement proposed by the Board previously which is set out below. The letter made clear that the interests of all parties should be respected and that there should be the safeguards in place to protect all shareholders, as envisaged in the Board compromise. TheMitchells & Butlers Board welcomes this statement.
The Board has continued to seek a compromise with PiedmontInc. On 8 January, after lengthy discussions between our Chairman, Simon Laffin, and Piedmont's proposed Chairman, John Lovering, and further withPiedmont's advisersLazard, the Board approved, and communicated toLazard, a compromise offer. This suggested, inter alia, that the Board have parity between directors nominated byPiedmontand those appointed through the normalBoard process, with John Lovering taking over as Chairman and Simon Laffin reverting to his previous role of Senior Independent Director. The key elements of this offer are attached to this announcementat appendix 1.
Though the Board has yet to receive a formal response to this offerfrom Piedmont,Piedmont's advisers,Lazard, haveinformed the Company that it isnotacceptable. The Board therefore retains its original recommendations to shareholders on how to vote at the AGM(see appendix 2).
In considering how to respond toPiedmont's proposal, theBoard recognises the right of shareholdersto nominate directors and, at the relevant General Meeting, tocontribute tothe composition of the Board. However,itdoes not believe it is appropriate for one 23% shareholder to nominate and appoint both the Chairman and a majority of the Board. Rather the Board must manifestly be seen to protect all shareholders interests equally.
By recommending shareholders vote in favour of two of Piedmont's nominees, the Board believes it has balanced the wishes ofPiedmontwith those of all shareholders. The decision to recommend Mr Burke and Mr Lovering arises, in the case of the former, as a result of the Board's assessment during the recent nomination process for Chairman. In the case of Mr Lovering, in addition to his extensive experience and success as a retailer,it reflects his helpful efforts to broker the compromise set out below. The Board does not express any views on the merits or independence of Mr Blood and Mr Balfour, and no conclusion on these should be inferred.
The Board remains willing to pursue the compromise offer made toPiedmontand will continue to be availabletodo so up until the AGM next week.
We urge all shareholders to vote in line with our recommendations.
The key elements of the Board's compromise offer are:
1. The Board of Mitchells &Butlerswould recommend the 4 directors nominated byPiedmont.
2.Piedmontwould vote in favour of the resolution toreappointSimon Laffin and Tony Bates.
3. The current Board members andPiedmontwould support John Lovering becoming Chairman and Simon Laffin reverting to being SeniorIndependentDirectorimmediately following the AGM.
4.Piedmontwould nominate one representative to be voted on at the AGM who will be supported by the Board. A second representative would be appointed byPiedmonton 31March 2010. The Board would go through the process of identifying a new independent non executive director in accordance with theCombinedCode on Corporate Governance.Piedmontand its representatives would support Mr Lovering's recommendation on this appointment.
5. The Company would inform ThePanel on Takeovers and Mergersthat it has reached a compromise agreement withPiedmontthat, in its view, addresses the issues raised going forward.
6.Piedmontwould commit not to pursue or support any litigation against the Company or any of itsdirectors.
7.Piedmontwould, for a period of 12 months following the AGM, vote in accordance with the recommendations of Mr Lovering with regard to appointments and dismissals ofdirectors of the Company.
8. The Company would not payPiedmont's costs.
9.Piedmontwould support all standard AGM resolutions.
10.Piedmontwould withdraw its resolution for the dismissal of Drummond Hall who wouldelect to step down from the Board immediately following the AGM.
The Board's Voting Recommendations
We recommend that youvote in favourof the resolutions to appoint:
Tony Bates (resolution 3a)
Simon Laffin (resolution 3b)
Ron Robson (resolution 3c)
John Lovering (resolution 12a)
Simon Burke (resolution 12d)
We recommend that youvote againstthe resolutions to appoint:
Michael Balfour (resolution 12b)
Jeremy Blood (resolution 12c)
We recommend that youvote againstthe resolution to remove:
Drummond Hall (resolution 13)
In addition, we recommend that youvote in favourof the other resolutions proposed by Mitchells & Butlers plc, as set out fully in the AGM Notice sent to shareholders on 17 December 2009, as follows:
|1) Receipt of financial statements;||7) Disapplication of pre-emption rights;|
|2) Approval of remuneration report;||8) Authority to purchase own shares;|
|4) Reappointment of Auditors;||9) Political donations;|
|5) Auditors' remuneration;||10) Articles of Association; and|
|6) Authority to allot equity securities;||11) Notice of Meetings.|
For further information, please contact:
|+44 121 498 6513|
|James Murgatroyd (Finsbury Group)|
|+44 207 251 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 theUK, Mitchells & Butlers has 10% of industry sales and average weekly sales per pub almost four times greater than that of the averageUKpub.
Mitchells & Butlers' leading portfolio of brands and formats includes Ember Inns, Harvester, Sizzling Pub Co., Toby Carvery, Vintage Inns, Crown Carveries, 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.