THE battle for Wolverhampton & Dudley Breweries has moved up a gear after the group unveiled plans to return £100m to shareholders by the end of the year.

The regional brewer, which is fighting a 513p-per-share hostile takeover bid by Hartlepool-based pubs group Pubmaster, is planning to buy about 22 per cent of its issued share capital if Pubmaster fails to win control.

Under the proposal, shares will be bought at no less than 491p-per-share, giving the buy-back a total value of about £100m. The share purchase is part of Wolves' plans - first unveiled last April, before Pubmaster's hostile bid was launched - to return £200m to shareholders by April 2003.

But a spokesman said the buy-back was also part of its defence strategy, saying: "It is a recognition of the fact that there are clearly some shareholders who want cash and this is a way of doing that."

Pubmaster, however, poured scorn on the proposal, claiming the buy-back would in fact benefit their bid. A spokesman said: "This will help us immensely. Where is the logic?

"Even a blind man can see that 491p for 22 per cent of your shares is not comparable to 513p in cash in full."

Wolves' has consistently urged shareholders to reject Pubmaster's' advances - the pubs group initially made an offer of 480p but upped it last week - claiming it was trying to buy it "on the cheap".

The 513p-per-share offer values Wolves at about £485m. So far, Pubmaster has received acceptances representing 16.9 per cent of Wolves' issued share capital.

It needs to secure over 50 per cent by 1pm on August 13, the deadline for shareholders to accept or reject the deal, for its bid to be successful.

Wolves' largest shareholder, fund manager Silchester International Investors, which holds a 11.3 per cent stake, has already backed Wolves' view that the Pubmaster offer should be rejected.

As well as the collapse of the bid, the share buy-back is dependent on Wolves, which brews Harp Irish Lager and Pedigree ale, selling its Pitcher and Piano bar chain.

The spokesman said the deal was at an advanced stage, but was unable to give more details.