Mitchells&Butlers to sell a portfolio of 333 pubs for £373m

UK pub operator Mitchells & Butlers announced plans on Friday to sell a portfolio consisting of 333 non-strategic pubs for a cash consideration of £373 mln (EUR 456 mln) to Stonegate Pub Company, a company controlled by London-based private equity firm TDR Capital.

The disposal is in line with Mitchells & Butlers' strategy to withdraw from the lower price, drinks-led market and the late night high-street bars and venues as announced in March 2010. This has led to a number of disposals of non-core businesses over the past months, for total gross consideration of £500 mln. In the next phase of the company strategy, Mitchells & Butlers intends to reinvest the proceeds into growth opportunities offered in the informal eating out market.

'I am delighted with the progress being made on reshaping Mitchells & Butlers' portfolio in line with the new strategy,' said Chairman John Lovering. Adam Fowle, Chief Executive, added: 'This disposal completes the first stage of our strategy. This will now enable us to reinvest in the informal eating out market where our market leading brands will deliver attractive growth and investment returns for our shareholders.'

Around 20% of the pubs are short leasehold generating £2 mln of operating profit in the year ended 10 April 2010. They are located across the UK including 33% in the south and 38% in the Midlands.

The transaction is expected to be completed by mid November 2010 and is conditional on the approval of the company's shareholders. Following the disposal, Mitchells & Butlers will have 1,580 restaurants and food-led pubs with higher growth potential.

Based in London, TDR Capital was founded in 2002 and currently manages funds worth EUR 2.6 bn, including investments in CenterParcs, Punch, Ask and Pizza Express.