UK: Carlsbergs UK arm and pub group Marstons agree to create £780 mln brewing joint venture
Pub group Marstons and the UK arm of Carlsberg will combine their brewing arms to form a £780 mln business that will allow the two companies to merge operations and save costs, The Financial Times reported on May 22.
Marstons will have a 40 per cent stake in the joint venture, while Carlsberg will own the remaining 60 per cent.
Shares in Marstons, which will receive a £273 mln cash payment as part of the deal, rose almost 90 per cent in afternoon trading in London. Carlsbergs share price remained largely flat.
We had built a great [brewing] business but had not been able to convey the value of that within the Marstons business, said Ralph Findlay, chief executive of the pub group. One of the attractions of Carlsberg, he said, was its strong portfolio of lagers, while Marstons brewing operations focused mostly on ales and premium beers.
Marstons, which owns the Pitcher & Piano chain and operates six UK breweries, has been hit hard by the pandemic after the government forced all pubs to close in late March.
Despite saying this month that it had been bolstered by beer sales in supermarkets, Marstons said it had secured an additional £70 mln to see it through the pandemic and cut its dividend. The deal would allow Marstons, which brews the Hobgoblin and Wainwright brands, to focus on its pub estate and reduce its debt load, Mr Findlay said.
In April, Carlsberg reported a 7 per cent decline in revenues in the first three months of the year because of pub and bar closures.
We are now building a new beer company by combining two organisations with shared values and strong history and heritage in brewing, said Tomasz Blawat, managing director of Carlsberg UK, which makes San Miguel and Kronenbourg.
The combined group, which will be named Carlsberg Marstons Brewing Company, is expected to achieve £24 mln in annual cost savings at the end of the third year after completion.
Ed Mundy, analyst at Jefferies, called the deal a smart, asset-light transaction that strengthens Carlsberg's position within the UK in a challenging market.
But Tom Stainer, chief executive of the Campaign for Real Ale, said the deal was a red flag to beer drinkers that would provoke further consolidation across the industry to the detriment of our national brewing heritage [and] consumer choice.
Rival Heineken bought 1,900 pubs from Punch and added them to its Star Pubs & Bars business three years ago, choosing unlike Carlsberg to invest in pub real estate as well as the operational businesses.
Carlsberg's UK business has struggled with falling beer sales: volumes declined by high single-digit percentages in 2019.
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