Mitchells & Butlers Share Discussion Threads

[pugugly] 31/1/2008 10:17

Market seems to be taking some short term profit - now down to 438p. Given the ban on smoking, layoffs in the City, increased taxes, lower discretionary spending, higher business rates who would want to take on these liabilities at this stage in the business cycle

- OK I know everthing has a price but we are moving into a buyers market for property not a sellers market. I think the young? scribblers at Morgan Stanley may never have experinces a real property downturn.

I suspect (if there is a takeover) that the price may be far closer to current market than their estimate

(dyor all cautions etc)

[bigboots] 31/1/2008 08:27

Morgan Stanley reckon that a bidding war will insue and the eventual winner may have to pay up to £2.5b equating to £6.50 per share

[sumo barry] 30/1/2008 21:21

This is the problem with going short on what should be a one way bet like MAB - it becomes a take over target. However, I wonder who is big enough to take them over and what banks will put up the money for the deal? I wouldnt be surprised if in the longer term the take over does not come to fruition and the share price drifts back to where it was before todays news.

[davius] 30/1/2008 18:03

I posted this on LSE.

What a difference an hour makes:

15:06 Shares in Mitchells & Butlers PLC were lower midafternoon as Investec downgrades to 'hold' from 'buy' with a price target of 426 pence following yesterday's trading update. At 2.59 pm, Mitchells & Butlers shares were down 2 pence at 399-1/4.

16:18 Further to the Company's announcement yesterday which referred to its intention to conduct a strategic review, the Board of Mitchells & Butlers notes the speculation surrounding potential expressions of interest for the Company. The Board confirms that a number of parties have now made preliminary and tentative expressions of interest in the Company to Citi, its adviser. However, no discussions have taken place and there can be no certainty that any will take place.

The shares closed at 473p.

[careful] 30/1/2008 16:31

things happen very quickly.
announcement of numerous approaches at 16.18.
up 70p within 5 minutes.
punch tav up 30.

I suppose it will be all paper.

[studhaves] 29/1/2008 13:57

I wouldn't be surprised if more heads roll at the AGM.

The outlook is poor, trading has been poor, redundancies & cut hours for staff, etc, etc, etc.

Still, the board of directors are nice & toasty, thats obviously all that counts.

[careful] 29/1/2008 13:03

the incompetence is mond boggling.
a finance director betting a fortune on the future direction of interest rates.
trying to justify his existence and show how clever he is no doubt.

keep it simple.

[washbrook] 29/1/2008 12:22

Gloomy report from Peston .
Tipped these at low 220s probably a good time to buy.

2003 259p high-199p low
2004 345p high-221.5p low
2005 434p high-288.5p low
2006 746.5p high-384.75plow
2007 909p high-413p low
2008 424.75p high-341p low( up to last nights close)

[sumo barry] 29/1/2008 11:50

This scathing article puts it into perspective:

[sumo barry] 29/1/2008 11:45

studhaves - according to the above article "The hedges will be settled using a bank facility set up for the purpose. That will lift balance sheet gearing to 67 per cent from 61 per cent and reduce post-tax earnings by £13m this year."

So they will roll up the debt and save it for another day.

[sumo barry] 29/1/2008 11:39

Its really £391 million hit mark to market. Reported as £274m because the tax payer will forego the difference to soften the blow!

[sumo barry] 29/1/2008 11:38

This looks to me like the ultimate case of emporers clothes with regard to the interest rate hedge / property portfolio (nothing for £274 mil). Not surprised the FD got the boot as he looks to have been dealing in positions he must not have understood the risk of. Lazy board members who rely on the advice of others and he has carried the can. Wake up UK PLC board members - do your own research next time.

[studhaves] 29/1/2008 09:47

Another thought - how are they paying this £274 mil?

Are they borrowing the money, remortgaging some properties, handing over shares, handing over property, or what? If they borrow it then theres interest to pay as well, so the final cost will be even higher.

It might be better if any interest costs come out of the directors salaries & they can't award themselves bonuses until they've paid it all off.

Sad that people within the group have lost their livlihoods & the worst that the directors get after such a poor showing is no bonus for the year.

Hardly seems fair.

[studhaves] 29/1/2008 08:51

"The board has, however, rejected the resignation of chief executive Tim
Clarke, who will remain with the group to oversee management's focus of
continued operational out-performance."


That had me rolling on the floor! Out performance! Under his leadership they've just taken a whopping £274 mil loss, they've cut staff hours in the pubs because trade is so bad, & are laying people off at head office too!

If the rest of the board think thats outperforming then I think the major shareholders should be getting rid of the lot of them!

[careful] 28/1/2008 18:36

i hope they do not close this position.
things change quickly.
feel sorry for that brilliant trader at soc gen who was on the verge, (24 hrs or so) from making a killing.
he got found out by his superiors, and they closed his positions at a £3.5 billion loss.

another day or so and he would have been a hero as the market turned quickly.

[sandybubbles] 28/1/2008 10:09

one point which may focus attention away from the effect of the hedge fund shambles, is who is buying all the shares offloaded by the index tracker funds ?

[studhaves] 28/1/2008 07:55

You heard it from me first (a couple of weeks ago actually!):


Mitchells & Butlers could face 260 mln stg hedge loss




LONDON (Thomson Financial) - Mitchells & Butlers PLC, Britain's biggest pub
operator, is understood to be considering the closure of a disastrous hedging
position in a move that could cost the group substantially more than 260 mln
stg, well in excess of a year's profit, according to The Guardian.
As the prospect of utilising the unwanted position in a 4.5 mln stg property
disposal or demerger recedes, the company is believed to have turned its
attention to assessing the most appropriate strategy for closing out the hedges
in a way that will minimise losses, the newspaper said.
It adds that chairman Roger Carr is expected to face tough questions from
investors at the group's annual general meeting on Thursday.

[bubface] 25/1/2008 17:47

libor rates have been rising over the past few days as it sinks in that the boe and ecb have decided there is little scope for interest rate cuts due to the inflation risk.i believe the mab hedges cover against risk of higher interest rates and higher inflation,now the dust is settling they will recoup much of the losses.
pubs are traditionally defensive and outperform in these times of economic uncertainty and i believe their earnings will prove durable.
i personally believe that these are highly attractive levels for the sector and that pub is the better quality fundemental play however for corporate action mab is a sitter i believe RT has already turned down £6 from pub,who probably have a good idea of the real value here.watch the irish they don't get involved £2 higher and walk away.

[studhaves] 24/1/2008 14:58

The hedge is for rates rising (ie rates futures). Rates lowering costs them money.

Since they took it out rates moved lower, the hedge bearing a £155 million loss PRIOR to that rate cut. The US just cut rates by 0.75%.

Which way do you think the BoE rates are likely to go in that scenario?


The hedge is probably now at a loss of over £300 million, and it could get significantly worse than that. If the BoE cut rates another 0.5% how much are they out of pocket by then? £600 million?

It looks goosed.

[careful] 23/1/2008 16:46

the property hedge must have a 50:50 chance of coming good in these unpredictable times.
anyone any ideas.?

[0800] 22/1/2008 07:51

Property is valued at £5.1b, maybe a change of management at least, but more a future property play. These have great property and brands, just poor management.

[jimmy c] 19/1/2008 16:36

massive debts, property hegde losing them a fortune. Short this to oblivion, a disaster unfolding in front of us.

[kristini2] 19/1/2008 16:29

anyone know what the property are valued at on thre balance sheet?

[studhaves] 18/1/2008 03:23

The hedge now will be nearer to £300 million in the red. Plus falling sales, falling property values, costs associated with smoking shelters (the locals cost 12K - even £2K * 2000 pubs = £4 mil in exceptionals & it could be much higher), & they're cutting staff hours. Food & drink prices increasing, energy costs increasing, transport costs increasing, etc.

Its going to hit sub £3 long before it gets to £5 - if it doesn't end up going under.