Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Mitchells and Butlers says rebel Piedmont has not changed position ahead of AGM

It would appear that the boardroom tussle at Mitchells & Butlers (LSE: MAB) will come to a head on Thursday, when Simon Laffin chairs the company’s AGM. Despite Piedmont’s apparent compromise over the weekend, Mitchells and Butlers said the boardroom rebels have not substantively changed their position and they expect that Joe Lewis’ investment company will attempt to vote-out the newly appointed chairman, Simon Laffin.

Over the weekend Piedmont said it is prepared to back the board’s recommendation to appoint another independent director. However according to Mitchells and Butlers the independence of the board would still be comprised as it expects Piedmont to vote against the reappointment of both chairman Laffin and non-executive director Tony Bates in Thursday’s AGM.

According to the pub group, it could not guarantee that the interests of all shareholders are treated fairly and equitably if both the chairman and more than half of the board were nominated by one shareholder or group of shareholders.

Recently, Piedmont claimed that Laffin had conducted “an orchestrated, relentless, baseless, yet highly damaging campaign against Piedmont and its officers”.

This boardroom bust-up has been rumbling on for some time now. Mitchells dismissed four directors in December, in a subsequent letter to investors the company said it had taken action to ensure it retained a fully functioning independent board for all shareholders.  Mitchells dismissed Piedmont representatives Richard McGuire and Douglas E McMahon, along with independent directors Denis Jackson and Raymond MacSharry on 1 December.

Piedmont was reported to have the support of other rebel investors including Irish tycoons John Magnier and JP McManus who control the Elpida investment vehicle. Piedmont and Elpida own 23% and 17.5% of the issued share capital in Mitchells and Butlers respectively.

The dispute centred around the composition of the company’s board of directors and specifically the vacant chairman’s role. The independent directors of the company believed that the Piedmont appointed directors were not acting in the interests of all shareholders and were actively recruiting a new independent director.
In the letter to investors Mitchells and Butlers said it had identified a number of events during November 2009 which it believed comprised the board’s ability to represent and protect the interest of all shareholders. According to Mitchells, on 15 November Mr McGuire stated that he would not support the appointment of any of the shortlisted candidates for the company’s new independent director, and two days later, informed Mr Laffin, the then senior independent director, that "a small number of large shareholders" would vote against his re-election at the AGM.

The four directors were consequently dismissed and Simon Laffin was appointed interim chairman. Later, Piedmont proposed resolutions that four new directors should be elected at the upcoming AGM, nominating John Lovering, Michael Balfour, Jeremy Blood and Simon Burke as independent directors.

As part of Piedmont’s apparent compromise they said they would delay the appointment of their second representative until the end of March.

Disclosure: The author holds no positions in the company