Punch investor mutiny over M&B merger
Punch shareholders have warned the pub company's board that they will vote against the proposed merger with rival Mitchells & Butlers unless the deal changes dramatically.
Investors representing nearly 10% of Punch are furious that the proposed all-share takeover proposal for M&B will hugely dilute their stakes.
Punch's share price has nosedived over the past six months and it is trading at a huge discount to the sector.
The terms of the deal are being billed as a 50-50 merger. However, investors claim that Punch will hand over £175m in cash and issue shares that will mean it pays for about 60% of the enlarged group but will end up with only about half of the equity.
Lars Bader, a fund manager at QVT which holds 6.7% of Punch, said: 'Punch is the most undervalued company in the world at the moment, but its share price represents only half what it is worth and this deal would mean we would be giving it away for free.'
Bader, who has already talked to Punch chief executive Giles Thorley, said his objection was not to the price of the bid but to the way it was being financed.
'If they could find debt to make this happen, that would be fine,' he said. 'But in the current format, it is not good enough.'
However, other investors such as hedge fund Marshall Wace, which like many others has an equal shareholding in both groups, feel that the opportunity to merge the companies is too good to miss.
On Friday, Thorley met Robert Tchenguiz, M&B's biggest shareholder.
Sources said the plan was to demerge the property business, selling off a proportion of the tenanted estate and potentially setting up a real estate investment trust.
On Friday it emerged that Trevor Hemmings, the man behind Blackpool Tower, had picked up a 3%stake in M&B through a family trust.
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