All Bar One owner Mitchells and Butlers yesterday revealed it was no longer in the race to buy brewer Scottish & Newcastle's pubs estate.

It is not clear whether the group, formed following the demerger of leisure conglomerate Six Continents earlier this year, pulled out of its own accord or failed to make the Scottish & Newcastle shortlist.

S&N put its retail division - including 1,450 pubs, restaurants and budget hotels - up for sale in April in order to focus on its brewing business.

It immediately launched an auction process to whittle down bids.

With some bidders already eliminated, the deadline for a second stage of the auction passed a week ago. It is likely to be some time before a final shortlist is drawn up.

Reports last week said that the Laurel Pub Company could be among the remaining contenders.

S&N's retail arm, which includes the Chef and Brewer chain and the Premier Lodge budget hotels business, is thought to be worth more than £2bn, bringing in average sales of £14,000 per unit every week.

Shares in Mitchells and Butlers rose sharply after the announcement to close up 11p at 252p - making it the highest riser on the FTSE 100 Index.

Bosses at Scottish & Newcastle were last night refusing to comment, except to confirm that S&N now had a shortlist in place. The company refused to reveal the names of the finalists.

Hartlepool pub group Pubmaster is among up to eight bidders for the retail estate.