M&B board facing shareholder rout

Billionaire Bahamas-based activist investor Joe Lewis has called on M&B to review the business and present a new strategy to shareholders within 60 days of Thursday's event at the Birmingham International Convention Centre.

Lewis, through his Piedmont vehicle – the pubs group's biggest shareholder with 23 per cent – also urged other investors in an open letter last week to back four nominee independent directors it has put forward to join the board. Among them is the former Scottish & Newcastle managing director, Jeremy Blood.

Together with other rebel shareholders, including Elpida, the investment vehicle of Irish racing moguls John Magnier and JP McManus, which holds a 17.6 per cent stake, the dissidents are thought to speak for more than 40 per cent. They are thought to include Leo Fund, with a 3 per cent holding.

The rebels, which the City Takeover Panel deemed had not acted in concert and so were within the rules, only need 50 per cent acceptance of the Piedmont resolutions to push them through at this week's meeting.

One of the key challenges to the M&B board is that Lewis is urging investors to vote against confirming Simon Laffin as group chairman, as proposed last November.

Paul Hickman, drinks analyst at broker KBC Peel Hunt, said this week's vote will be a key test of the board's authority.

Hickman said: "Laffin needs a 50 per cent majority to get through. We know that Piedmont has 23 per cent, Elpida owns 17 per cent and Leo has a small single-digit stake.

"Therefore, it is clear that not too many (independent] votes would be needed to swing the decision on the various resolutions the rebels' way."

Another analyst said: "A head of steam may have built up behind Lewis and the others now. They do not have to sway a lot of minds to make things pan out the way they want."

However, a leading Scottish shareholder muddied the waters last week when it came out publicly against Lewis's demand, calling it "both unreasonable and contrary to the interests of the wider shareholder base".

Standard Life Investments, which speaks for just under 2 per cent of M&B, said: "On 11 January, 2010, the board made its recommendations in respect of the resolutions at the forthcoming AGM. Among other things, these support some measure of board representation for the company's largest shareholder.

"These recommendations are in the best interests of all shareholders and should command support."

Meanwhile, the Association of British Insurers, the trade body for many leading investors in M&B, has called on it to come to a compromise with Lewis.

M&B's Scottish pubs include Deacon Brodie's in Edinburgh and Glasgow's Horseshoe Bar. It also owns the O'Neill's and All Bar One chains.