Top stakeholders in Revolution Bars are starting to warm up to the idea of a merger with nightclub operator Deltic Group.
Shareholders in Revolution rejected a more than £100m takeover offer from Slug and Lettuce owner Stonegate Pub Company earlier this month.
Deltic had attempted to put the brakes on the takeover bid by launching its own all-share proposal in early October, but Revolution's board opted for Stonegate's offer.
In a recent note, analysts at Peel Hunt said they believed shareholders turned down the Stonegate offer as a result of Deltic's equity merger proposal.
"We do not believe shareholders voted for the company to remain independent. We believe RBG [Revolution Bar Group] shareholders want the Deltic merger to proceed. This would resolve stewardship issues and create significant shareholder value. Thus, we believe management should now engage with Deltic."
Will Tamworth a portfolio manager at Artemis, which owns about 15 per cent of Revolution's shares, told the Sunday Times: “We think there could be a logic in combining with Deltic - but it needs to be on the right terms and does not need to be straight away."
Following the failed takeover bid, Revolution's chief executive Mark McQuater quit the company with immediate effect.
Chairman and former Arsenal managing director Keith Edelman is currently acting as chief executive.
“In the new year, the management team can sit down, bring in a new chief executive and review the strategic options, which may include looking at whether there is still merit to the Deltic merger proposal," Rod Oscroft, a fund manager at Legal & General, told the Sunday Times.
In its travel and leisure report, Peel Hunt analysts said Revolution Bars should have the greatest upside of a range of firms in the leisure sector, but it would be dependent on management listening to shareholders and merging with Deltic.
Shares in Revolution, which operates around 60 bars, closed at 167.5p on Friday, down from around 211p at the beginning of the month.
Earlier this month the group reported pre-tax profits fell over the full-year to £3.6m from £5.1m the previous year. Like-for-like sales grew 1.5 per cent, however, and revenue was up to £130.5m.