Whether you’re a fan of Sunday pub lunches or just like a night out on the town, chances are you’ve stepped into Mitchell & Butler’s property on more than one occasion.
The company’s pub and bar portfolio is eclectic, including everything from the famed Spaniards Inn Browns Brasseries & Bar in London’s Hampstead Heath to Harvester and Toby Carvy brands.
Like the rest of the hospitality industry, M&Bs had a tough time during the lockdown, with 1,300 jobs cut as sales plummeted. The cherry on top of a lucrative cocktail for investors was a discounted £350 million fundraiser backed by a consortium called Odigen, the company’s largest shareholder.
Tap on tap: Mitchell & Butler pubs and bars are bouncing back, sales higher than before pandemic
The new shares were issued at a 36 percent discount to M&B’s share price prior to the fundraising announcement. The issue was a bitter draft for shareholders in the short term as they saw the value of their investments decline, but management led by Phil Urban says the action was necessary to ensure that the company could service its debts, while Outlets remain closed.
He added that the money raised will help the business bounce back more strongly when life returns to normalcy.
Now that going out is back on the menu, the latest figures from M&B show that punters are making up for lost time. Over the past eight weeks, sales were at 104 percent of their pre-pandemic levels for the same time of year, although Urban says the recovery is ‘shaky’, with food-based pubs recovering more strongly, especially At the premium end. Market.
The company is also taking steps towards financial stability. Douglas Jacks, analyst at Peel Hunt, points out that M&B has £64 million less debt than it did two months ago. He has upgraded his profit forecast to £10 million. He believes the company’s valuation is at its lowest level ever.
However, for investors interested in a sip of Mitchell and Butler, there may be a fly in the ointment, or perhaps a worm in the bottom of tequila, when it comes to the firm’s stock structure.
Odizen, formed by billionaire currency trader Joe Lewis and horseracing owners JP McManus and John Magnier, now owns more than half the business.
It has already indicated that it is happy to ride a rough ride on the wishes of other investors by supporting the re-election of the long-serving chairman when a quarter of total shareholders voted against him. Ultimately, it’s possible that Odyzean will acquire the entire business, but for now, remaining investors will be forgiven for feeling like they’re at the top of the line behind these major shareholders for the bar.
This is something to consider before deciding whether to round in or not.
Midas Verdict: The pandemic has been a terrible time for Mitchell and Butler, but the company is now in a strong financial position. This could enable it to be acquired as other companies fail to prosper during the new normal.
Early signs of selling after the pandemic are good and the company’s shares look relatively cheap. They closed at £2.51 on Friday, up from £4 before the pandemic.
If you can withstand the wishes of a majority shareholder, and take a glass-and-half-full view of the hospitality industry’s potential for recovery, the shares are worth a sip.
traded on: main market Ticker: mAb contact: mbplc.com or0121 498 4000