Marston’s shares soar on US takeover talk

SHARES in Marston’s frothed nearly 16pc higher after the pub chain received a takeover approach.

The company yesterday revealed it is in talks about a potential cash offer from US private equity firm Platinum Equity Advisors. Under takeover rules, Platinum now has until February 26 to make a firm bid.

Marston’s said: ‘The board will evaluate the proposal with its advisers and a further announcement will be made in due course.

‘There can be no certainty that any firm offer will be made for the company, nor as to the terms on which any firm offer might be made.’

After the announcement, shares in the chain surged 10pc, or 7.5p, to 82.3p.

Marston’s also struck a deal last month to manage more than 150 pubs on behalf of South Wales-based Brains, saving around 1,300 jobs. But it was not yet clear whether that arrangement would be affected by the potential takeover, a spokesman said.

Marston’s is the latest pubs operator to attract interest from private equity amid a flurry of deals in the sector over the past five years.

Greene King agreed to a £4.6bn takeover by Hong Kong’s CK Asset in 2019, while Ei Group was bought by Slug & Lettuceowner Stonegate last year. Analysts yesterday said Platinum’s advance could trigger a fresh wave of deal-making and pointed to rival Mitchells & Butlers as another potential target, prompting its shares to rise 2.1pc or 6p to 298p as well.

Marston’s was valued at £473m before the interest from Platinum sent its shares surging higher. But Mark Irvine-Fortescue, an analyst at Stifel, said that was less than the net value of its assets, suggesting it would likely sell for more. This is partly because the firm is likely to face less pressure to reduce debt and resume dividend payments if it goes private, he added.

Following the jump in its share price, Marston’s was valued at about £530m yesterday. The advance from Platinum came as all 1,368 of chain’s pubs remained shut because of the coronavirus lockdown.

Pubs and breweries have been among the worst-hit businesses during the pandemic, with forced closures and reduced footfall hammering sales and pushing many to the brink. Between mid-February and midMarch 2020, Marston’s shares plunged by around 80pc. They remain down by about 20pc compared to a year ago.

Last year the company revealed plans to cut around 2,150 jobs and called for more government support as it posted an annual loss of £397m.

Boss Ralph Findlay has said the rollout of Covid-19 vaccines is now crucial to the recovery of the pubs sector.