Marston’s PLC sells brewing stake to Carlsberg, sharpens focus on pub operations

In a strategic move to sharpen its focus on the pub sector, Marston’s PLC has announced the divestiture of its 40% stake in the brewing joint venture, Carlsberg Marston’s Limited (CMBC), to a subsidiary of Carlsberg A/S for a substantial £206 million in cash. This transaction aligns with Marston’s objective to transform into a pub-centric enterprise, shedding non-core brewing assets to bolster its presence in the competitive UK pub market.

The sale not only fetches an attractive price but also fortifies Marston’s financial stance by substantially reducing its debt and enhancing its balance sheet. The deal values the stake at a multiple of 14.5 times EBITDA and 24.3 times EBIT for the year ending December 31, 2023, translating into significant leverage reduction and financial agility for Marston’s. Proceeds from this sale are earmarked for aggressive debt repayment, with the aim to trim net debt to below £1 billion well ahead of schedule, projecting a pro-forma net debt of approximately £959 million by March 2024.

This pivotal transaction marks a deliberate shift by Marston’s to exit the brewing business, where it has faced various macro and socio-economic challenges, including impacts from COVID-19 and rising operational costs. The decision underscores a strategic pivot towards leveraging its robust pub business, which features a mix of managed and partnership pubs across approximately 1,370 locations in the UK. The sale proceeds will enable Marston’s to invest more dynamically in its core business areas, enhancing shareholder value through focused capital allocation and improved operational efficiencies.

Despite the sale, Marston’s will maintain its commercial relationship with CMBC through a long-term brand distribution agreement, ensuring continued strategic benefits from this association. This ongoing partnership is expected to support both entities in maximizing their market potential while focusing on their respective core competencies.

The transaction, categorized as a Class 1 transaction under UK Listing Rules, is pending approval from Marston’s shareholders, with potential regulatory changes anticipated by summer 2024 that could impact the approval process. Completion is targeted for the end of September 2024, with a long-stop date set for December 15, 2024.

Justin Platt, Chief Executive Officer of Marston’s, emphasized the transaction’s strategic importance, marking it as a key milestone in focusing the company on its core pub business and delivering exceptional customer experiences. “This deal not only strengthens our financial foundation but also enhances our ability to focus solely on what we do best—providing outstanding pub experiences,” Platt stated.