THE four directors ousted last week from Mitchells & Butlers, the pub giant, threatened to refuse to sign off its annual financial results in a row over the value of the company's property estate.
The showdown was the spark that led to M&B, owner of 2,000 pubs, ousting the four rebels and preparing a report for the Takeover Panel concerning the activities of some of its shareholders.
On Tuesday, M&B removed Richard McGuire and Douglas McMahon, board representatives of Joe Lewis, the Bahamas-based billionaire who holds a 23% stake via his Piedmont investment vehicle.
The company also ousted Ray MacSharry and Denis Jackson, who are assumed to speak for John Magnier and JP McManus, the Irish horseracing tycoons who between them control 17% of M&B.
The Sunday Times can reveal that the latest dispute took place the night before the results 10 days ago. The four directors initially refused to sign off the accounts because they thought the figures should reflect a lower valuation of the company's property portfolio than was stated, given the drop in profits at the group.
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The remaining seven of the 11-strong board were comfortable with the proposed 2.3% decline in the pub estate, especially given the estate's value had dropped by 9% the previous year. The new valuation had been put together by Colliers, the property agent, and signed off by Ernst & Young, the pub group's auditor. The situation was only resolved close to midnight, when it was agreed that a fresh, independent valuation would be carried out, and the whole board signed off on the figures.
M&B, which runs the Harvester and All Bar One chains, regarded the dispute as the latest stage in a deteriorating relationship with these four non-executives. It removed them last Tuesday, a day after claiming representatives of Lewis had vetoed candidates for a new chairman and had requested the resignation of Simon Laffin, the senior independent director.
The firm said it believes some shareholders were seeking to gain control of the board without having to make a formal takeover offer. Piedmont said in response last week that it was not in a position to veto board decisions and denied it had requested Laffin's resignation. It added that it was not trying to undermine the independence of the board.
McGuire said this weekend that the dispute over the property valuation was indicative of Lewis's wider concerns over what he claims is a lack of transparency at M&B, an issue that will be raised with fellow investors in the next few days.
McGuire said: "We are trying to seek meetings with leading M&B shareholders, both institutional and entrepreneurial. We want to meet with as many as possible to explain our concerns about transparency and governance at the company."
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M&B, which last week appointed Laffin as chairman to succeed Drummond Hall, said: "What we have made transparent this week is that a number of shareholders have been seeking to gain control of the board."
McGuire also sought to play down suggestions in some quarters that Lewis's actions are designed to smooth the way for a takeover bid. "We have not given any serious consideration to making a takeover bid for M&B," he said.
M&B shares closed at 264 and 5/8p on Friday, valuing the group at £1.1 billion.