M&B reportly held talks to buy Punch division

LONDON (Reuters) - Pubs owner Mitchells & Butler (MAB.L) has held discussions with rival Punch Taverns (PUB.L) about buying part of its estate, The Sunday Times and Sunday Telegraph said.

The company, which held merger talks with Punch earlier this year after putting itself up for sale, now wants to buy Punch's managed pubs arm Spirit, the reports said, adding that the two sides met last week.

The potential deal could be funded by the sale of a minority stake in M&B to a private equity firm. Newspaper reports have said the group has received interest in a stake from Permira, Bain Capital and a consortium of CVC and Blackstone.

Neither M&B nor Punch were immediately available for comment.

M&B will announce the outcome of a strategic review on May 20. It lost nearly 400 million pounds earlier this year after a property deal with shareholder Robert Tchenguiz went wrong, costing both chairman and finance director their jobs.

However, The Sunday Telegraph reported that Tchenguiz and other shareholders were still hoping to cash in on the property portfolio, and may oust M&B Chief Executive Tim Clarke if he could not deliver.

Shares in M&B closed on Friday at 332.75 pence, valuing the business at 1.3 billion pounds.

(Reporting by John Bowker, editing by Will Waterman)