UK: Marston’s rejects US private equity group takeover offer

Marston’s, the UK pub group, has rejected a £693 mln offer from the Beverly Hills-based private equity group Platinum Equity on the basis that it “significantly undervalues” the business, the Financial Times reported on February 1.

The all-cash proposal revealed on January 29 was the third offer made by Platinum since the beginning of December. Valuing Marston’s shares at 105p, it marked an increase of nearly a fifth on its initial 88p-per-share offer.

The Marston’s board said on February 1 that it had “unanimously rejected” all three offers, the latest of which they said represented a 19 per cent discount to the company’s share price at the beginning of 2020, before the onset of the pandemic.

It argued that since then the company had completed a “transformative” deal with Carlsberg by selling its brewing division into a £780 mln joint venture.

Marston’s has also announced an agreement to operate 156 pubs previously run by the Welsh brewer SA Brain, which the board said would be “accretive to earnings in the first full year of trading”.

Marston’s share price rose by more than 6 per cent on February 1 to 87.3p, putting its market capitalisation at £556 mln.

With sterling still relatively weak and valuations of hospitality businesses diminished as a result of the crisis, analysts expect a spate of corporate activity across UK-listed companies from foreign investors.

Greg Johnson, an analyst at Shore Capital, said the private equity interest implied a view that pubs and hospitality businesses would recover quickly once restrictions were lifted and that “margins can recover beyond pre-Covid levels”.

Pub companies such as Marston’s, which operates a 1,400-strong estate, are particularly attractive because of the freehold property assets that they hold. Rival pub groups Greene King and Ei Group were both subject to private takeovers in 2019.

Despite a cash injection of £273 mln from the Carlsberg deal, Marston’s was forced to cut 2,150 jobs, almost a fifth of its workforce, in October as a result of the crisis.

Under UK takeover code rules, Platinum, whose founder Tom Gore owns the US pro basketball team the Detroit Pistons, still has until February 26 to make a formal offer.

It holds investments in a wide variety of companies from the clothing company Mad Engine to United Site Service, which provides portable toilets.

Platinum declined to comment.

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