The list of bidders for All Bar One owner Mitchells & Butlers narrowed this morning after rival group Punch Taverns withdrew its merger proposal.

There is still a window for other bids to be tabled from the private equity arena before today's deadline expires. But other bidders are believed to have already pulled out due to concerns about the pub trade.

Despite the fading takeover talks, shares in Mitchells rose 3%, or 8.5p in early trade to 338 pence.

Mitchells is understood to have received a number of approaches from private equity groups, with TPG, CVC Capital Partners, Cinven, Terra Firma and Apax all reportedly making expressions of interest.

However,one report this morning said that Apax, Cinven and Terra Firma have also decided to pull out of bidding. Punch Taverns said the terms of its proposal were no longer in the best interest of its shareholders.

But the group did hint that it may still get involved if any bidders come forward with a proposal that could maximise value for Punch. Punch Tavern's proposal rested on a deal whereby shareholders in the two pub companies would each own 50% of the merged group, with M&B shareholders receiving an additional £175 million cash payment.

People close to the negotiations said a deal with M&B still had 'compelling logic' to it, but that there had been a number of sticking points in the due diligence process. Some were said to be worried about the size of Mitchells's pensions deficit and cash position. Mitchells has been working on its own strategic review - due to be finalised in May - and refinancing proposals.