Mitchells & Butlers 'in talks to buy Orchid pub company'

Mitchells & Butlers is close to buying the Orchid pub company for more than £250m, according to reports.

The owner of Harvester and All Bar One is in talks to take over up to 180 of Orchid’s food-led venues, with a further 40 traditional pubs expected to enter administration, The Times claimed.

M&B is believed to have offered £266m for Orchid, which runs Pizza Kitchen & Bar and The Great British Carvery. This is £10m to £15m more than private equity firms Colony Capital and Starwood

Capital, who were also in the running along with Spirit Pub Company, The Times wrote.

Brewer Greene King had been involved in takeover talks with Orchid but pulled out last Friday.

A day earlier M&B chief executive Alistair Darby refused to comment on “market speculation” linking his company with a deal for Orchid.

Despite Mr Darby’s efforts to revive the company following a long period of under performance and instability, analysts believe M&B is still underperfoming its competitors by a significant margin. A 1.1pc increase in first half like-for-like sales “is not a good number”, Mark Brumby, of Langton Capital said.

M&B could sell Orchid’s head office in St Albans to save up to £8m should a deal be completed.

Orchid is owned by a trust linked to Deutsche Bank, which was left holding the business after the pub group went through a restructuring in 2012. This followed a pre-pack administration in 2008 after Orchid’s debt became unsustainable.

M&B declined to comment and Orchid could not be reached for comment.