LONDON BRIEFING:LOSING THE best part of $1 billion in the collapse of Bear Stearns last year does not appear to have dulled the ambitions of Joe Lewis, the legendary Bahamas-based currency speculator whose battle for control of Mitchells & Butlers has now exploded into open warfare, writes FIONA WALSH

Despite its rather anonymous corporate name, M&B owns some of Britain’s best-known pubs and bars, from the Harvester restaurants chain to All Bar One and O’Neills. Thanks to Lewis, still a member of the billionaire’s club despite his credit crunch losses, the company is now at the centre of one of the messiest, and most public, boardroom battles seen in the City for some time.

Along with the septuagenarian Lewis, the cast of players in the boardroom drama includes horse racing tycoons John Magnier and JP McManus, former minister for finance Ray MacSharry, and Archie Norman, the former Asda boss just installed as chairman of struggling broadcaster ITV.

Lewis is M&B’s largest single shareholder, holding a stake of 23 per cent via his Piedmont firm; Magnier and McManus, through their Elpida investment vehicle, control about 17.5 per cent. While none of Lewis, Magnier or McManus has been formally named by M&B, the pub group has taken the unusual step of publicly accusing dissident shareholders of attempting to gain control of the board, highlighting what it called “the increasingly difficult relationship between the board and a small number of its largest shareholders”.

The implication is that the Irish tycoons are backing Lewis and the matter is now with the UK Takeover Panel, which can impose a number of sanctions on rebel shareholders if it finds they are indeed acting in concert. As their combined stakes total more than 30 per cent of the shares – the level at which a full-scale bid is triggered – they could be forced to make a formal offer for the group or to offload part of their shareholdings.

After taking its complaint to the panel on Monday, M&B escalated hostilities yesterday by kicking out half of its non-executive directors – Lewis’s two representatives on the board, Richard McGuire and Douglas McMahon, were given their marching orders, as were MacSharry and another non-exec, Denis Jackson. Simon Laffin, the senior independent director, was elevated to the role of chairman in a move M&B said was “to protect the interests of all shareholders”.

The position of chairman has been a key battleground in the war of attrition between M&B and Lewis, which has been rumbling on behind the scenes for some months. M&B says all three candidates (including Norman) put forward earlier this year by its nominations committee were vetoed at the 11th hour by Piedmont. Norman, who is highly regarded in the City, was said to have been dismissed as a candidate because of his lack of experience of the pub trade.

According to M&B, the rebel shareholders also demanded the resignation of Laffin (who was one of the short-listed candidates for the chairmanship), threatening to vote against his re-election as a director at the annual meeting in January 2010. Lewis has also taken issue with the group’s remuneration scheme and its plans to issue new shares.

This is not the first time M&B has found itself the target of rebel shareholders – two years ago the property tycoon Robert Tchenguiz waged a war against the group in an attempt to unlock its valuable property assets. Battered by the credit crunch, Tchenguiz was forced to sell his stake last year – the buyer, unfortunately for M&B, was Lewis. Even more unfortunately for M&B, it entered into a disastrous deal with the property tycoon which left it nursing hedging losses of £400 million.

To swap one dissident shareholder for another could just be bad luck but M&B must be held at least partly responsible for the mess in which it now finds itself. After all, nobody forced the board to offer Lewis representation on the board after he took his stake.

After a torrid couple of years, the latest boardroom battle is a distraction the M&B management could well do without. Speculation that Lewis may be planning a full-scale takeover of the business seems wide of the mark, but it helped M&B shares climb 5 per cent higher yesterday. While M&B may have looked to have had the upper hand as it booted out the rebels, Lewis is unlikely to leave it there. Whatever the panel rules, he will want to have his say at the annual meeting in January. Book your places now.

Fiona Walsh writes for the Guardian newspaper in London