Marston’s to dispose of 40% stake in Carlesbeg JV

Marston’s has announced the sale of its 40% interest in Carlsberg Marston’s Limited to a subsidiary of Carlsberg for £206m in cash to create a business entirely focused on pubs.

According to Marston’s, pubs are at the “heart of UK socialising and the UK pub market offers significant opportunities to capitalise on and drive value for shareholders”. 

Marston’s pub business is built on “strong fundamentals”; a suburban-dominated, predominantly freehold estate of 1,370 pubs combined with a balance of managed and partnership (‘franchised’), tenanted and leased pubs allows the group to optimise its consumer offering and deliver a “highly cash generative operating model”. 

The transaction allows Marston’s to “further build on those strong fundamentals and accelerate progress in driving the success of the pub business and demonstrates management’s preparedness to take decisive steps that will drive shareholder value”. 

In 2020, CMBC was formed to combine the strengths of both Marston’s and Carlsberg, leveraging complementary drink portfolios and an extensive distribution network. 

Over the last three years, this partnership has played a significant role in enhancing CMBC’s customer offering. 

Whilst Marston’s believes that CMBC is “well-positioned” for future success as a market leader under Carlsberg’s sole ownership, it has been challenged by a number of unforeseen macro and socioeconomic factors, including Covid-19, higher operating costs and inflation. 

Furthermore, as announced on 2 July 2024, the licensed production and distribution agreement for San Miguel with CMBC in the UK will not be renewed beyond 31 December 2024. 

The board of Marston’s has unanimously approved the transaction and believes it is in “the best interest of all of its shareholders”. The board stated that the proposed transaction represents an attractive result for Marston’s shareholders with the Marston’s Group’s interest expense to reduce by c.£18m annually versus the board’s expectations and the overall outcome earnings accretive.

Further detail on Marston’s priorities and focus will be outlined at an investor day in the Autumn.

Justin Platt, chief executive officer, said: “Today’s announcement represents a significant milestone for Marston’s as we realise our stake in CMBC. In my first six months with the business, it has become very clear to me that our core capability and key opportunity to unlock value for shareholders is in driving a focused and successful pub business. 

“This deal further strengthens our balance sheet, significantly reducing our debt by over £200m. In addition, CMBC remains valued strategic partners and we continue to benefit from our ongoing long term brand distribution agreement with them. Crucially, it allows us to become a pure play hospitality business and focus on what we do best – namely, giving our guests amazing pub experiences. I look forward to delivering on the opportunities a focused pub business will provide to ensure we maximise value for our shareholders.”