Financial News

Mitchells & Butlers is prepared to head off a potential rebellion by offering its two largest shareholders board representation.

Drummond Hall, M&B chairman, is understood to be in talks with Joe Lewis, the Bahamas-based billionaire, and Elpida, the investment vehicle for Irish horseracing tycoons JP McManus and John Magnier, over the appointment of a representative from each camp as non-executive director.

It was not clear on Wednesday night whether either party would take up the offer. An agreement, if reached, is likely to be announced in the coming weeks.

M&B, Mr Lewis and Elpida declined comment.

The decision to offer board seats to its two largest shareholders, thus giving them more say over M&B strategy, comes at a delicate time for the pub group.

It is looking for a chief executive after Tim Clarke, its long-standing head, resigned last month after a hedging arrangement that cost the company £500m. It is also facing calls from shareholders for more transparency in its search for two non-executive directors. Several smaller shareholders have said they have been frustrated by a lack of consultation on the process. "We have told management . . . that given the hedging losses we would like to see someone with more experience dealing with complex financial instruments and their risks appointed," said a shareholder.

The appointments that are being discussed with Mr Lewis and Elpida are understood to be separate from this.

Mr Lewis has been on M&B's share register since October after he boughtbeleaguered entrepreneur Robert Tchenguiz's 21 per cent stake.

He has topped up his holdings in recent weeks and holds a 22.3 per cent stake.

Elpida owns 17.6 per cent of M&B.

It is unclear what Mr Lewis and Elpida's plans for M&B are. Amid recent speculation that the two may be looking to shake up the business, others who know the two parties insist they are largely supportive of the management and would support the appointment of Adam Fowle, chief operating officer and acting chief executive, to the top job.