Mitchells & Butlers PLC (LSE:MAB), the hospitality operator, has played down the likelihood of it acquiring Whitbread PLC's (LSE:WTB) pub and restaurant chains.
Earlier this month, the Premier Inn owner was reportedly considering a sale of its non-core brands which include Brewers Fayre and Beefeater.
One of the key criteria of the deal was that the bidder must be an established pub operator, igniting speculation that the Miller & Carter owner may get involved.
However, in a meeting with Jefferies Group (NYSE:JEF), management at M&B rejected the idea due to a lack of brand equity and the fact many of the for-sale venues share sites with Premier Inns.
In the meeting with the US bank, management also noted how trading had been strong, thanks to a record Father’s Day, sunny weather, and improvements in London operations.
Phil Urban, chief executive officer, and finance chief Tim Jones added they believe profits could return to pre-pandemic levels within the next two years.
Additionally, the group said it hasn’t felt any benefits from food deflation yet, instead, expectations are the upside will be realised next year.
However, deflation in utility prices has helped the group, as it is less hedged than most other rivals.
Jefferies keeps its recently upgraded ‘buy’ rating and targets a 270p share price.
Shares in the group opened at around 202p on Tuesday, up more than 40% in 2023.