Speculation is growing that the Australian retailer Woolworths will launch a takeover bid for the pub operator Australian Leisure & Hospitality Group, a deal that could reach a value of A$1 billion.

It emerged late last week that Bruandwo, a joint venture between retailer Woolworths and businessman Bruce Mathieson, had acquired a 16% stake in ALH, which owns a portfolio of 131 pubs and some 260 retail liquor outlets across Australia.

Today, ALH confirmed it had met with executives of Bruandwo.

ALH said Bruandwo "expressed interest in exploring alternatives that may benefit both parties, but did not present any specific proposal" at the meeting.
 
Both groups declined to elaborate further. But ALH said: "ALH remains open to discussions that it feels might provide value to all shareholders of ALH."

Bruandwo acquired its ALH stake at an average price of A$2.62 over the last month, with the largest chunk snapped up on Thursday.