See M&B's shares

The company had been in talks with banks about forming a joint venture with shareholder Robert Tchenguiz.

The deal would have seen the new firm, R20, control about 1,300 pubs, with a total rental income of close to �240m.

However, concerns about higher global interest rates have changed the way many firms and lenders view the future.

The worry is that the era of cheap money - when low global interest rates allowed firms to borrow large sums to finance expansion - has now come to an end.

Industry overhang

In recent weeks, stock markets have tumbled, while bonds and the cost of borrowing money have risen, as investors and lenders look to reduce their exposure to risk.

As a result, a number of large deals have been put on hold until market volatility dies down, giving investors and lenders a better idea of the direction in which the global economy, and interest rates, are heading.

"In the view of the prevailing conditions in the debt markets, the board of M&B has concluded that the joint venture proposal is unlikely to be achieved until debt markets have improved," the company said.

The company's shares fell about 5% to 716 pence in London on the news.

"Discussions are continuing with R20 to enable the transaction to be implemented subject to debt markets improving."

M&B is not alone in planning to spin off its property holdings. Pub rival Greene King's shares dropped 2% on concerns that its own deal would also encounter problems.

'Setbacks'

BlueOar Securities analyst Mark Brumby said: "The deal may yet happen and good companies will trade through short-term 'setbacks'."

However, he added that the delayed M&B deal would hang over the sector for some time.

M&B owns about 2,000 pubs, as well as the Browns brand.