4th May 2006 07:02
Mitchells & Butlers PLC04 May 2006 4 May 2006 Mitchells & Butlers plc Response to 550p proposal for Mitchells & Butlers plc Mitchells & Butlers plc ("the Company") received a pre-conditional proposal lastnight from a consortium led by the Tchenguiz Family Trust ("the Consortium"). Inline with the Board's commitment to make public the terms of any proposal toensure transparency to all shareholders, the letter containing the proposal hasbeen posted together with this announcement on the Company's website,www.mbplc.com. The Board has reviewed with its advisers the proposal of 550p per share in cash.The Board believes that this proposal undervalues the business and itsprospects. Therefore, the Board does not believe that the proposal, which issubject to conditions, is in the best interests of the Company and itsshareholders. The proposal fundamentally fails to recognise the value and prospects of theCompany, which: - has built the leading position in the rapidly growing pub food market with powerful brands and formats, serving some 80 million meals in the last year; - has delivered the fastest like for like sales growth in the pub sector over the past two years, with a further 4.1% increase in the first 29 weeks of this financial year; - has increased net retail operating margin* since 2003 despite significant external cost pressures through its focus on staff productivity, purchasing and efficiency gains; - has delivered over 20% p.a. EPS** growth in the past two years and will deliver not less than 17% EPS** growth in the first half of this financial year; - owns a unique estate of freehold assets in high quality locations; and - has returned £642m to shareholders since demerger in 2003, in addition to ordinary dividends and has committed to return at least a further £500m in this calendar year (subject to market conditions) less any funds invested if a value creative acquisition opportunity is secured. The Company's recent trading statement demonstrates the continued strongoperating and financial performance of the business and its prospects. The Board believes that the Company has a proven, sales focused growth strategy,in a rapidly expanding eating out market, which is driving strong earningsgrowth, dividends and asset appreciation. This combines strong cash returns toshareholders with long term value creation. The Board believes that the Companyhas excellent prospects for organic growth and is well placed to take advantageof further consolidation opportunities. The priority remains to maximise valuefor shareholders. This announcement has been made without the consent of the Consortium. There canbe no certainty that an offer will be made by the Consortium nor as to the termson which any offer might be made. In accordance with Rule 28.5 of the City Code on Takeovers and Mergers, thedirectors of the Company confirm that the profit estimate set out in Appendix 2of the trading update published by the Company on 28 April 2006 (the "ProfitEstimate") remains valid and that they have also received confirmation fromErnst & Young LLP and Citigroup Global Markets Limited that they have noobjection to their respective reports published in respect of the ProfitEstimate continuing to apply. * Net retail operating margin is calculated as net retail operating profit before exceptional items divided by retail sales. ** EPS for the first half of this financial year is stated before exceptional items and refers to basic earnings per share. EPS for the past two years is also before exceptional items and uses a pro-forma figure in respect of 2003 EPS in order to take account of the demerger in April 2003. For further information please contact: Investor Relations: 0121 498 5092Kate Holligon [email protected] ------------------------- Media:James Murgatroyd / James Leviton (Finsbury Group) 0207 251 3801 Ernst & Young LLP has given and has not withdrawn its written consent to theissue of this announcement with the inclusion of the reference to its name inthe form and context in which it is included. Citigroup Global Markets Limited ("Citigroup") has given and has not withdrawnits written consent to the issue of this announcement with the inclusion of thereference to its name in the form and context in which it is included. Citigroup which is authorised and regulated in the United Kingdom by TheFinancial Services Authority, is acting as financial adviser to Mitchells &Butlers plc ("Mitchells & Butlers") and no one else in connection with theproposal made to Mitchells & Butlers and will not be responsible to anyone otherthan Mitchells & Butlers for providing the protections afforded to customers ofCitigroup nor for providing advice in relation to the proposal. The directors of Mitchells & Butlers accept the responsibility for theinformation contained in this announcement. To the best of the knowledge andbelief of the directors of Mitchells & Butlers (who have taken all reasonablecare to ensure that such is the case) the information contained in thisannouncement is in accordance with the facts and does not omit anything likelyto affect the import of such information. The distribution of this announcement in jurisdictions other than the UnitedKingdom may be restricted by law and therefore persons into whose possessionthis announcement comes should inform themselves about, and observe, suchrestrictions. Any failure to comply with the restrictions may constitute aviolation of the securities laws of any such jurisdiction. This announcementdoes not constitute an offer or an invitation to purchase or subscribe for anysecurities or a solicitation of an offer to buy any securities pursuant to thisannouncement or otherwise in any jurisdiction in which such offer orsolicitation is unlawful. Dealing Disclosure Requirements Under the provisions of Rule 8.3 of the City Code on Takeovers and Mergers (the"Code"), if any person is, or becomes, "interested" (directly or indirectly) in1% or more of any class of "relevant securities" of Mitchells & Butlers, all"dealings" in any "relevant securities" of that company (including by means ofan option in respect of, or a derivative referenced to, any such "relevantsecurities") must be publicly disclosed by no later than 3.30 pm (London time)on the London business day following the date of the relevant transaction. Thisrequirement will continue until the date on which the offer becomes, or isdeclared, unconditional as to acceptances, lapses or is otherwise withdrawn oron which the "offer period" otherwise ends. If two or more persons act togetherpursuant to an agreement or understanding, whether formal or informal, toacquire an "interest" in "relevant securities" of Mitchells & Butlers, they willbe deemed to be a single person for the purpose of Rule 8.3. Under theprovisions of Rule 8.1 of the Code, all "dealings" in "relevant securities" ofMitchells & Butlers by the Consortium or Mitchells & Butlers, or by any of theirrespective "associates", must be disclosed by no later than 12.00 noon (Londontime) on the London business day following the date of the relevant transaction.A disclosure table, giving details of the companies in whose "relevantsecurities" "dealings" should be disclosed, and the number of such securities inissue, can be found on the Takeover Panel's website atwww.thetakeoverpanel.org.uk . "Interests in securities" arise, in summary, when a person has long economicexposure, whether conditional or absolute, to changes in the price ofsecurities. In particular, a person will be treated as having an "interest" byvirtue of the ownership or control of securities, or by virtue of any option inrespect of, or derivative referenced to, securities. Terms in quotation marks are defined in the Code, which can also be found on thePanel's website. If you are in any doubt as to whether or not you are requiredto disclose a "dealing" under Rule 8, you should consult the Panel. Cautionary note regarding forward-looking statements This announcement contains certain forward-looking statements as defined underUS legislation (Section 21E of the Securities Exchange Act of 1934) with respectto the financial condition, results of operations and business of Mitchells &Butlers and certain of the plans and objectives of the board of directors withrespect thereto. These forward-looking statements can be identified by the factthat they do not relate to historical or current facts. Forward-lookingstatements often use such words as 'will', 'should', 'continue', 'anticipate','target', 'expect', 'estimate', 'intend', 'plan', 'goal', 'believe' or otherwords of similar meaning. The forward-looking statements contained herein arebased on assumptions and assessments made by Mitchells & Butlers' management inlight of their experience and their perception of historical trends, currentconditions, expected future developments and other factors they believe to beappropriate. By their nature, forward-looking statements are inherentlyspeculative and involve risk and uncertainty, and there are a number of factorsthat could cause actual results and developments to differ materially from thoseexpressed in or implied by such forward-looking statements. These factorsinclude, but are not limited to: the future balance between supply and demandfor Mitchells & Butlers' sites; the effect of economic conditions and unforeseenexternal events on Mitchells & Butlers' business; the availability of suitableproperties and necessary licenses; consumer and business spending, changes inconsumer tastes and preference; levels of marketing and promotional expenditureby Mitchells & Butlers and its competitors; changes in the cost and availabilityof supplies; key personnel and changes in supplier dynamics; significantfluctuations in exchange rates; interest rates and tax rates; the availabilityand effects of any future business combinations, acquisitions or dispositions;the impact of legal and regulatory actions or developments; the impact of theEuropean Economic and Monetary Union; the ability of Mitchells & Butlers tomaintain appropriate levels of insurance; the maintenance of Mitchells &Butlers' IT structure; competition in markets in which Mitchells & Butlersoperates; political and economic developments and currency exchangefluctuations; economic recession; management of Mitchells & Butlers'indebtedness and capital resource requirements; material litigation againstMitchells & Butlers; substantial trading activity in Mitchells & Butlers'shares; the reputation of Mitchells & Butlers' brands; the level of costsassociated with leased properties; competition for high quality managers;declining sales of beer in pubs in the UK; food safety scares; fundingliabilities in respect of the Group's pension schemes and the weather. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Mitchells & Butlers