Tchenguiz close to EUR 7.4 bn deal with Mitchells and Butlers

Iranian billionaire property tycoon Robert Tchenguiz is reported to be close to signing a deal with Mitchells and Butlers (M&B), owners of the O'Neill's pub chain, that would involve them transferring most of their property assets into a 50/50 joint venture with his R20 investment vehicle valued at close to £5 bn (EUR 7.4 bn). M&B announced in May that it was planning to split the management of its freehold pubs into an operating unit that would run the pubs themselves and a property unit that would look after the real estate business. Tchenguiz owns around 16% of M&B, and has been reportedly hoping to spin off its property portfolio since he failed to acquire the group a year ago.

M&B said the market for a REIT conversion was not yet sufficiently developed to provide shareholders with sustainable additional value if a pure split between property and operations was undertaken. The company said it preferred a sale-and-lease-back arrangement, and described Tchenguiz as the 'most competitive bidder' for the 50% of the pub estate the operator is willing to sell.

Meanwhile, Tchenguiz is said to be looking to strike a similar deal with UK supermarket chain Sainsbury’s, in which he has an 11% stake. Last April he acquired La Tasca, the Spanish-themed restaurant chain, beating Blackstone's bid with his £104 mln (EUR 153 mln) offer. These moves are indicative of the pressure being put on retail and leisure companies by their shareholders to capitalise on their extremely valuable property portfolios. Tesco recently formed a £650 mln (EUR 960 mln) partnership with British Land involving the sale and leaseback of 21 stores. In another recent sale-and-leaseback agreement, Brussels-based property investor Cofinimmo struck a deal to acquire 90% of Immobrew, the real estate subsidiary of beer brewer Inbev, for EUR 419 mln.