Robert Tchenguiz, the property entrepreneur who is expected to play a key role in the fate of J Sainsbury, is close to tying up a £4.5 billion property joint venture with Mitchells & Butlers (M&B), the pub group behind All Bar One and Harvester.

The deal is expected to allow M&B to return up to £1 billion to shareholders. Although that is well below forecasts, it takes into account estimated costs of £75 million to £100 million and a pension contribution of up to £200 million. It also gives M&B room to pursue acquisitions like last year’s purchase of 239 Whitbread outlets.

The deal with Mr Tchenguiz, who has a 14 per cent stake in M&B itself, will involve the injection of more than 1,500 M&B pubs and restaurants into a 50-50 joint venture with Mr Tchenguiz’s R20 investment vehicle.

When a possible deal was announced in May, the venture was expected to produce a property yield of between 5.25 per cent and 5.5 per cent. However, analysts now predict 5.5 per cent. Although that makes it slightly less favourable to M&B, analysts believe the rationale for leveraging the underlying value of M&B’s property assets to return cash to shareholders remains unchanged.

The decision by M&B to pursue a property joint venture follows pressure from Mr Tchenguiz to spin off its entire property portfolio into a real estate investment trust. However, M&B has insisted that it wants to retain at least partial control of its assets.

Mr Tchenguiz became interested in M&B a year ago, eventually launching an abortive offer worth about 550p a share. Neither party would comment.

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