Analysts have defended former Mitchells & Butlers finance director Karim Naffah, who left the company this week following a £270m hedging calamity.

KBC Peel Hunt analyst Paul Hickman said: ‘The company thought it was acting in the best interests of shareholders. If the deal went ahead, a Real Estate Investment Trust would have been set up, which would have generated a lot of cash for shareholders.’

Karim Naffah, who has been FD since 2003, fell on his sword after the pub operator - owners of All Bar One and the Harvester chain - disclosed the massive loss on the back of a property deal with tycoon Robert Tchenguiz imploding.

M&B entered into interest rate swaps and other financial derivative deals aimed at protecting it from fluctuations in interest rates and inflation.

But after the credit crunch, M&B was left holding the hedges, but not pursuing the deal. It booked a £155m charge in its 2006/07 year and said this week that it would take a further £119m post-tax hit this year.

None of M&B’s seven executive directors, including Naffah, will receive a bonus for 2007 as a result.

Deputy FD Jeremy Townsend will now assume control of M&B’s finances.

This morning reports in the press suggested M&B could now be subject to takeover bids from rivals, including Punch Taverns. M&B is now estimated to be valued at £1.9bn after a steep rise in the company's share price.