Apax has pulled out of the running to acquire Mitchells & Butlers, underlining the difficulties confronting leveraged buyers according to the Sunday Telegraph.
Apax declined to pursue its interest after a meeting with management earlier this moth, while a second private equity firm, Cinven, turned down an invitation to meet according to the report. Blackstone, CVC Capital Partners and KKR are said to remain ‘involved’ in the situation.
Mitchells & Butlers is undergoing a strategic review after reporting losses of £422 million ($840 million, €565 million) earlier this year as a result of a failed property deal with property investor Robert Tchenguiz.
The decision by Apax and Cinven not to enter into further buyout talks demonstrates the difficulties facing financial buyers, according to the Telegraph report.
As well as being no debt financing being available for large buyouts, potential bidders for M&B face having to fund the company’s pension deficit, which is understood to have grown since its last valuation in March 2007. The deficit then was £250m, with liabilities of £1.5bn.