23rd Dec 2020 08:57
(Alliance News) - Marston's PLC on Wednesday said it will operate 156 SA Brain & Co Ltd pubs on a combination of leased and management contract arrangements.
Shares in the brewery, pub and hotel operator were up 2.4% at 70.52 pence on Wednesday in London.
SA Brain's is a Cardiff-based family business, which owns a portfolio of 156 pubs mainly located in South and West Wales.
The business has been placed under significant financial pressure from the pandemic, in particular from the more stringent additional trading restrictions in Wales.
The agreement with Marston's is expected to address SA Brain's immediate funding requirements, safeguarding 1,300 jobs.
Under the agreement, Marston's will operate 141 pubs on a leasehold basis with effect from February 2021, with GBP5.5 million in annual rent chargeable from April. The majority of the pubs will be on a long lease agreement of 25 years.
The outlet level earnings before interest, tax, depreciation and amortisation on a pre-Covid basis will be GBP14 million.
In addition, a further 15 leasehold sites will be operated under management contract.
The transaction is expected to be earnings accretive in the first year post-completion, and Marston's sees opportunities to further increase earnings in the medium term through additional investments into the estate.
"We have worked closely with the management team and the SA Brain family to collaborate on a mutually beneficial transaction that safeguards the future of Wales' leading pub company, enabling these great pubs to have a stable and successful future, and securing 1,300 hospitality jobs in Wales," said Chief Executive Ralph Findlay.
"This transaction is entirely consistent with Marston's long-term strategy as a focused pub operator and strengthens our representation in South and West Wales, whilst protecting the heritage and independence of an iconic Welsh business. These high quality pubs are a great fit with our existing estate and will benefit from Marston's scale and operational expertise to further unlock their excellent long-term potential," Findlay added.
By Dayo Laniyan; [email protected]
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