Mitchells & Butlers to reject second takeover bid

Pubs and restaurants group Mitchells & Butlers (M&B) said it would reject a second takeover offer after knocking back an initial bid from billionaire Joe Lewis's Piedmont investment firm.

Piedmont said on Monday it was considering whether to return with a bid of 230 pence a share, after its 224p offer was rejected last month.

M&B said such an offer still "significantly undervalues" the group.

Piedmont is M&B's largest shareholder, with a 23% stake.

Bahamas-based Mr Lewis, who first bought into M&B in 2008, has overseen a boardroom shake up, which saw three board members leave last year. Two of the five-man board are now Piedmont appointees.

New strategy

M&B, which owns the All Bar One and Harvester chains, said a 230p-a-share bid would be a 2.4% discount on the company's closing share price on Monday.

However, speculation about future takeover bids helped M&B shares to rise almost 9% to 239p in late morning trading.

M&B has been focusing on food as it struggles to adjust to lower consumer spending during the weak economic recovery.

The Birmingham-based group sold 333 of its drinks-led pubs to Stonegate Pub Company for £373m in November last year as part of this strategy.

It still owns almost 1,600 restaurants and pubs.