Marston's pub chain receives takeover proposal from US private equity group
The pub chain Marston’s has received a takeover approach from a US private equity group in a move that could fuel a spate of deals in the embattled hospitality sector.
The news of the all-cash offer from Platinum Equity Advisors prompted a 17% spike in Marston’s share price to 87p, giving the pub and brewing group a market value of £553m.
“The board of Marston’s confirms that it has today received an unsolicited non-binding proposal from Platinum Equity Advisors regarding a possible cash offer,” the company said in a statement to the stock market. “The board will evaluate the proposal with its advisers and a further announcement will be made in due course.”
Under stock market rules, Platinum now has until the end of the day on 26 February to make a formal offer.
Marston’s, formerly known as Wolverhampton & Dudley Breweries until a 2007 rebrand, owns about 1,400 pubs, restaurants, cocktail bars and hotels across the UK, including the Pitcher & Piano chain. The pub group owns the freehold in about 90% of its pub properties.
Under Ralph Findlay, Marston’s long-serving chief executive, the business has significantly expanded in recent years. Last month, the familyowned Welsh brewer SA Brain & Co handed over the running of its 156 pubs to Marston’s, saving 1,300 jobs, after the coronavirus pandemic threatened closures. Covid restrictions have battered the sector. Marston’s shares were trading at almost 130p in 2019 before the pandemic hit; the slump has now made it a takeover target.
Earlier this month, former Greene King chief Rooney Anand raised £200m to invest in pubs with the support of private equity backers.
Despite resilient trading through the summer, Marston’s announced in October that aimed to make 2,150 of its 14,000 employees redundant, as government restrictions to curb the pandemic took a toll.
Last May, Carlsberg and Marston’s announced a joint venture called the Carlsberg Marston’s Brewing Company. The Danish brewer took a 60% stake, while Marston’s retained a 40% stake as well as taking a £273m cash payment.
In 2019, Greene King was bought by Li Ka-Shing, head of Hong Kong’s richest family, for £2.7bn.
Analysts at Jefferies wrote: “We would argue that Greene King was a far higher quality business than Marston’s based on estate scale, geographic coverage (greater exposure to more affluent UK regions) and profit per pub. Private equity buyers may see a consolidation platform play and therefore be prepared to pay an initially higher multiple.”