Private equity groups are expected to propose taking stakes in Mitchells & Butlers this weekend, but rival Punch Taverns has pulled its merger offer.

Punch said it was still weighing proposals to team up with third parties for a transaction with M&B. But even that may come to nothing. Punch is thought to be exasperated at M&B’s handling of its strategic review and is convinced its rival has been determined to stay independent all along.

Punch lodged an offer for a 50-50 merger plus £175m cash in February, within a day of M&B’s announcement that it was carrying out a strategic review after a £391m loss from the closure of hedge positions.

In a statement on Friday Punch said preliminary discussions and due diligence on M&B had led it to conclude its offer was no longer in shareholders’ interests.

Some Punch shareholders had expressed concerns that a merger could be dilutive. One person close to the situation said: “Everybody who has been through the process has said that this is a management that wants to stick it out.”

M&B insiders hinted on Friday that they wished to speed up the process. But about 60 per cent of the shares are held by investors who want M&B to maximise its real estate value.

Chief among these is Robert Tchenguiz, the property entrepreneur, who holds a 23 per cent stake.

Some interested parties in Punch are thought to have become concerned at the size of M&B’s pension fund deficit and its ability to service it. One M&B insider said the deficit had risen above the £250m last reported.

Private equity groups may seek partial stakes in M&B, operator of the All Bar One and Harvester chains, which had set a deadline of on Friday for offers.

Apax, Cinven and Terra Firma are among those understood to have examined a bid but to have withdrawn because of difficulties in raising debt to fund a bid. Blackstone and CVC were said to be still keen on an approach, possibly together or with other parties.