Punch Taverns, Britain’s biggest pub company, is in the early stages of considering an audacious £5 billion-plus bid for Mitchells & Butlers (M&B), the owner of the All Bar One and Harvester chains,The Timeshas learnt.

The possible move comes as M&B considers hiving off its pub property assets into a real estate investment trust (Reit) after the collapse of a £4.5 billion property joint venture with Robert Tchenguiz. The entrepreneur, who speaks for 19 per cent of M&B, is tipped to be a key investor in the Reit.

Shares of M&B, which were trading at 898p in May, jumped by 43p to 641p yesterday, a rise of 7.2 per cent, amid rumours of a bid from Punch. That values the group at £2.59 billion, or £5.1 billion including debt.

Punch, which declined to comment, is best known as a tenanted and leased pub owner, but two years ago it returned to the managed pub sector by acquiring Spirit Group for £2.7 billion after outbidding Mr Tchenguiz. It subsequently bought Mill House Inns.

Of the 1,830 pubs acquired from Spirit, Punch has sold off about 400 and converted 637 to leases, leaving it with 793 under such brands as Chef & Brewer. Analysts said that if it were to acquire M&B’s 2,200 pubs, it would reshape the estate in a similar way.

Punch had indicated previously that it would sell its managed pubs for the right price, although Giles Thorley, chief executive, said recently that the chances of a sale had been hit by the credit crunch.

M&B’s fortunes have fallen recently as the debt crisis caused it to delay a deal to inject about 1,300 of its pubs into a venture with Mr Tchenguiz. It has been criticised for taking out a hedge against interest and inflation rates before signing a deal, leaving it with a posttax loss of £140 million.

Analysts said that Tim Clarke, M&B’s chief executive, would be unlikely to welcome a Punch bid.

Wagamama, the noodle bar operator controlled by Lion Capital, is believed to have put plans for a sale on hold after private equity firms balked at the mooted £215 million price.

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