Punch Taverns has put an end to speculation that the company was mulling over a £5bn offer for rival pub chain, All Bar One and Harverster owner Mitchells & Butlers (M&B).

The group issued a statement stating that it “is not in discussions with M&B or any M&B shareholder regarding any offer or merger”.

The rumours began last week that Punch – which predominantly owns tenanted and leased sites – had been in preliminary talks with M&B shareholders, but M&B flatly denied this at the time.

If a deal did go ahead, the combined company would be the UK’s largest pub company, with more than 11,000 outlets.

M&B – which also owns O’Neill’s – delayed a £4.5bn property deal in August this year that would have seen it sell a 50 per cent stake in its assets to Robert Tchenguiz, who already owns a 20 per cent share in the company.

M&B blamed the postponement on volatility in the marketplace, and have incurred substantial losses as a result.