Birmingham-based pubs group Mitchells & Butlers yesterday wasted little time in rejecting a formal £2.69 billion takeover proposal from tycoon Robert Tchenguiz.
The Fleet Street group, parent of the All Bar One and Harvester chains, received the conditional offer from Mr Tchenguiz's bid consortium late on Wednesday.
The M&B board met shortly after to dismiss the approach, which it believes undervalues the business and its prospects.
In an unusual move, M&B also posted the letter containing the proposal from Mr Tchenguiz on its website.
It revealed that the bid team planned to expand the M&B estate by combining it with the Laurel Pub Company, which includes the Yates's brand and is also owned by Mr Tchenguiz. M&B - the UK's second biggest pubs operator by market value - emerged as a takeover target of Mr Tchenguiz in the middle of last month. But the Birmingham-based pubs company told the tycoon last week that it would not consider the interest until a formal written offer was put on the table. He had until next Monday to beat a "put up or shut up" deadline from the Takeover Panel.
As expected, the proposal was priced at 550p and represented a 38 per cent premium on the M&B average share price in the month prior to news of interest.
The offer, which included a number of pre-conditions, valued M&B at around £4.6 billion when the company's debt pile is included.
But M&B pointed out in its response that it had delivered the fastest like-for-like sales growth in the pubs sector over the past two years, with a further 4.1 per cent increase in the first 29 weeks of this financial year.
It also said it had powerful brands and formats serving some 80 million meals a year.
M&B told investors: "The board believes that the company has excellent prospects for organic growth and is well placed to take advantage of further consolidation opportunities. The priority remains to maximise value for shareholders."
The group operates more than 2,000 outlets and comprises the pick of the former Bass and Allied Domecq estates. Its chains also include Vintage Inns and Scream. The business was created in October 2002 after former Bass company Six Continents announced the separation of its hotels and retail divisions.
Brokerage Numis Securities said a 550 pence bid would equate to 10.4 times forecast earnings before interest, tax, depreciation and amortisation for 2006, compared with recent sector deals at around ten times EBITDA forecasts.
"A bid of at least 600 pence will be required to receive a recommendation from the M&B board. But an offer of 600 pence looks stretched on all metrics," Numis said.
Morgan Stanley also said an offer at 600 pence could mean M&B "might be prepared to enter into talks".
M&B has expressed an interest in the 250 Beefeater and Brewers Fayre pub restaurants which leisure firm Whitbread recently said it wants to sell. On April 27, M&B forecast a ten per cent rise in first-half profit after a rise in like-for-like sales growth in its second quarter to 4.3 per cent from four per cent in its first quarter.
Mr Tchenguiz has rapidly built a pub empire which runs around 418 managed pubs under brands such as Slug and Lettuce, Hog's Head and Yates's. He also owns around 450 tenanted pubs.
M&B shares closed four per cent lower, off 22p at 494p, after hopes of a takeover deal began to fade.