Marston’s expands UK presence with £55m acquisition of rival brewer
Wolverhampton pubco and brewer Marston’s is expanding its UK presence with the £55m acquisition of the brewing business of the Charles Wells Group.
Based in Bedford, Charles Wells Brewing and Beer Business is an established brewing business with a portfolio of more than 30 beers including leading brands such as Bombardier, Young’s and McEwan’s.
In addition, the business has UK distribution rights for the Estrella Damm lager brand and other beers under license including Kirin and Erdinger.
As part of the acquisition, Marston’s has entered into a long-term exclusive agreement to supply all beer, wine, spirits and minerals to the Charles Wells pub estate. The brewery site, which is freehold, employs around 300 people.
Charles Wells joins an existing brewing portfolio including Marston’s Pedigree, Wainwright, Lancaster Bomber and Hobgoblin. The group’s beer portfolio also includes Banks’s, Jennings, Wychwood, Ringwood, Brakspear and Mansfield beers.
Marston’s said the acquisition complemented its existing strategy by extending its leading position in the premium bottled ale and cask ale markets, and enhanced its share of the premium canned market.
It also strengthens the group’s presence in London and the South East and presents a platform to expand into Scotland.
While developing its licensed brands business, it also expands production capabilities to include lager brewing and canning, while improving production and distribution efficiency.
The enterprise value of £55m equates to 9x current EBITDA before synergies – which are expected to be £4m by financial year 2019.
The transaction is being funded through a new equity placing.
It is placing 57.6 million new ordinary shares in the company and is targeting institutional investors. The placing represents approximately 9.9% of the company’s issued share capital. J P Morgan Securities, which conducts its UK investment banking activities as J P Morgan Cazenove, and Numis Securities are acting as joint bookrunners.
Ralph Findlay, CEO of Marston’s, said: “We are delighted to have agreed to acquire Charles Wells Brewing and Beer Business. It is a high quality brewing business offering us opportunities to extend our trading area in the South of England and Scotland, and brings a range of well-known and popular brands into our portfolio.
“We also aim to develop further our range of international licensed brands, and look forward to working with our new overseas partners, including Estrella Damm, Erdinger and Kirin.
“The acquisition of Charles Wells Brewing and Beer Business builds on Marston’s established brewing prowess and is a further step in our objective to develop the leading premium beer business in the UK market.”
He said the previous acquisitions of beers such as Hobgoblin, Wainwright, and Lancaster Bomber underlined its ability to take on and develop established brands.
The group has also achieved success with international licensed brands including Shipyard, now the second biggest craft beer in the UK on trade.
Marston’s also announced today that it had agreed to acquire seven pubs in strong locations to enhance its Destination and Premium estate. The deal is worth £13m with a refurbishment investment of £3m, representing 7.8x post investment EBITDA.
The announcements coincide with latest interims, which show first half underlying revenue rising by 3% to £440.8m, with pre-tax profit up 3% to £33.7m.