22nd May 2020 14:22
(Alliance News) - Marston's PLC and Carlsberg UK Holdings Ltd have formed a new joint venture for brewing and distribution in the UK, resulting in a large cash payment to Marston's.
The FTSE 250-listed brewer & pub operator said it will receive a 40% stake in the Carlsberg Marston's Brewing Co joint venture, plus a balancing cash payment of up to GBP273 million.
Marston said the deal values its brewing business at GBP580 million and the Carlsberg UK brewing business at GBP200 million.
The company added that it will use the cash to reduce debt and provide additional financial flexibility.
Earlier in May, Marston's said it secured an additional GBP70 million through an increased bank facility to ensure it is "best placed to navigate this period of uncertainty" created by the Covid-19 pandemic. At the time, it said the temporary closure of its pub estate and the additional GBP70 million liquidity would set back the its debt reduction "trajectory".
In March, the company had commenced a debt reduction programme with the goal of reducing debt by GBP200 million by 2023. As at the end of 2019, net debt was GBP1.39 billion.
"I am delighted to announce today's JV with Carlsberg UK. This new partnership acknowledges Marston's strategy, position and consistent outperformance against the UK beer market, realising value for shareholders today, whilst retaining an interest in the future upside of the combined entity," said Chief Executive Ralph Findlay.
"Marston's strong heritage, extensive distribution platform and established reputation for brewing and logistics excellence, together with Carlsberg UK's values, long history in beer, brand portfolio and scale, combine the best attributes of both to create a compelling beer business with an outstanding portfolio of global and local beer brands, proven brewing expertise, strong distribution network and wholesale opportunity," he added,
The transaction is expected to complete in the third quarter of 2020.
Marston's stock was trading 44% higher at 46.84 pence each on Friday afternoon in London
By Ife Taiwo; [email protected]
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