More developments in the Punch/Mitchells & Butlers saga. Fund manager QVT Financial has come out against Punch's plan for a (nearly) all-paper merger with M&B, and this morning has raised its stake from 6.7% to 7.5%.
According to the Morning Advertiser, QVT thinks the deal would be giving Punch away. It would like to see the company put some debt into the equation.
Mark Brumby at Blue Oar Securities commented this morning: "Particularly given the 100p drop in Punch's share price since it floated the idea of a merger/takeover, the fund manager has a point. There has been no flesh put on the bones of the Punch proposal, which is potentially quite important. If the 50:50 is fixed then the 'bid' is now worth less to M&B holders and, if it isn't fixed, then Punch shareholders would receive less than 50% of the enlarged vehicle, which would see them diluted further."
He adds: "The Guardian suggests that [the fall in Punch's share price] implies the company's shareholders do not like the proposed deal with M&B. However, while that is one possibility, there are others, including that shareholders (or, more specifically, those small proportion of them on the margin that have actually transacted any shares in the last week) believe the deal will have to be sweetened further in order to stand any real chance of success.
"M&B's share register contains an eclectic mix of shareholders or CFD holders, many of whom have differing or even conflicting views as to where the company should be going. Hence, while an agreed deal would speed things, it is likely that this has some time to run."
Indeed yesterday, entrepreneur Trevor Hemmings declared a 3% interest in M&B. M&B is now 2p lower at 436p, while Punch has edged up 1.5p to 614p.
