The decision by Punch Taverns to withdraw its merger proposal to Mitchells & Butlers (M&B) has sparked the usual recriminations. Although no one would say very much this morning, the Punch camp clearly believes that the management of M&B was doing everything in its power to put off prospective bidders.

Yet all week M&B sources have been adamant that there were "no sacred cows" and that the company would be amenable to any legitimate proposal, be it a cash offer, merger, cash and stub equity proposal or partial offer.

In truth, it does look as though M&B was hardly the most enthusiastic seller, but, then, who could blame it? Until last year, when it rather misguidedly decided to change its strategy and discuss an asset sell-off with Robert Tchenguiz, it was widely regarded as one of the best-run companies in the pub sector.

It was the subsequent collapse of the property deal and resultant £391 million hedging loss that forced the company to consider approaches as part of a wide-ranging strategic review. Unsurprisingly, given the debt market crisis, most if not all of the interested private equity firms have walked away, at least from making an outright bid.

Although Punch's merger proposal, which contained a £175 million cash sweetener, could easily have been funded, the resultant 20 per cent earnings dilution had become a matter of serious concern to some Punch investors.

Last week's research note from Lehman Brothers, claiming that M&B faces a cash crunch, will not have helped, despite a strong rebuttal from M&B.

So where does this leave M&B? In its statement this morning, Punch said that it was looking at alternative proposals in tandem with unspecified third parties, although this looks like more a case of Punch keeping its options open in case the M&B share price collapses rather than anything tangible.

Some analysts believe that if, as looks likely, M&B retains its independence, it will be back to business as usual for one of the best operators in the business — a position that may be enhanced if it can persuade one of the circling private equity firms to take a signficant minority stake.

This would give it the firepower to take the business forward more aggressively than its current financial position would allow, although the uncertain trading environment may make it difficult to persuade private equity of the investment case.

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