Apr. 2, 2003 - Three big banks have racked up UKpound 15 million in advisory fees from pubs-to-hotels operator Six Continents for telling the board and shareholders not to accept a UKpound 5.6 billion takeover bid from entrepreneur Hugh Osmond. 

Schroder Salomon Smith Barney and Merrill Lynch share up to UKpound 10 million for their work as joint financial advisers to Six Continents, according to a City source. 

Six Continents broker Cazenove will be able to take between UKpound 4 million and UKpound 5 million for its work in persuading institutional investors to reject the bid and let the company demerge into two public listed companies. 

These would be Mitchells & Butlers for the pubs and restaurants, including All Bar One, and InterContinental Hotels Group for the hotels business, which includes Holiday Inn. 

WestLB has a chance to join in what has become one of the biggest fees bonanzas for investment banks this year as it has just been hired to advise M&B on the planned float and to consider takeover bid approaches. Six Continents has already admitted it faces a UKpound 110 million bill for the cost of the demerger. 

Its array of bankers, brokers, lawyers and accountants are charging UKpound 51 million. Taxes and "other costs" come to UKpound 30 million while new banking facilities cost UKpound 28 million. 

Chief executive Tim Clark revealed to a closed group of the company's investors this week that he had appointed a new three-man bid committee for M&B to examine any offers for its business to be chaired by Sir Roger Carr, the Six Continents non-executive director who chairs a similar new bid committee for Six Continents itself. 

European private equity house BC Partners has confirmed that it still wants to bid for M&B despite being formally rebuffed by the Six Continents board and being refused access to more detailed financial information. Sources close to Osmond said today that he is "keeping his options open" for Mitchells & Butlers. 

Takeover rules prevent Osmond from bidding again for Six Continents for at least six months but he can make a fresh offer for M&B, a separate company, to take the All Bar One and O'Neill's pubs chains he always wanted. 

Meanwhile, talk of another bid for Six Continents' 2000 pubs is still doing the rounds. Dealers believe that The Laurel Pub Company could come forward to make a UKpound 3 billion offer within the next few weeks. 

Laurel is believed to have hired investment bank NM Rothschild to advise. Financing is likely to be arranged with leading investment banks, sparking another bonanza in fees for the City. 

The demerger of Mitchells & Butlers, which now operates the pubs division, is expected to take place on 15 April. City sources say that Six Continents will oppose any bid by Laurel. 

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(c) 2003, Evening Standard, London. Distributed by Knight Ridder/Tribune Business News. SXC, C, MER,