Marston's fizzing over Charles Wells brewery acquisition
By Josh White
Date: Thursday 18 May 2017
(ShareCast News) - Marston's announced on Thursday that it had agreed to acquire the Charles Wells brewing business from the Charles Wells Group, for a cash consideration of £55m plus working capital adjustments.
The FTSE 250 company said the Charles Wells Brewing and Beer Business, based in Bedford, was an established "high quality" 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 had 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 said it 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.
Marston's said the Charles Wells Brewing and Beer Business acquisition complemented its existing strategy, as it extended its number one position in the premium bottled ale and cask ale markets, and enhances its share of the premium canned market.
It also strengthened its presence in London and the South East, and presented a platform to expand into Scotland.
Finally, Marston's said the transaction developed its licensed brands business and expanded its production capabilities to include lager brewing and canning, whilst improving production and distribution efficiency.
The board said there was a strong financial rationale for the Charles Wells Brewing and Beer Business acquisition, with the enterprise value of £55m equating to 9x current EBITDA before synergies.
It said the transaction was to be funded through a new equity placing, and added that expected synergies of £4m were to be achieved by financial year 2019.
The return on invested capital was expected to exceed 18% in the third full year.
"We are delighted to have agreed to acquire Charles Wells Brewing and Beer Business," said Marston's chief executive Ralph Findlay.
"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."
Findlay said the acquisition of Charles Wells Brewing and Beer Business built on Marston's "established brewing prowess", and was a further step in its objective to develop the leading premium beer business in the UK market.
"We have demonstrated our ability to acquire, integrate and develop beer brands evidenced by the success of brands such as Hobgoblin, Wainwright, and Lancaster Bomber.
"We have also achieved success with international licensed brands including Shipyard, now the 2nd biggest craft beer in the UK on trade."
Justin Phillimore, chief executive officer of Charles Wells Brewery, said the company was "delighted" to have reached an agreement with Marston's to acquire the brewery and become a "close" trading partner.
"After a detailed review of our strategy we had decided to re-balance the company more towards retail investment and that meant finding a partner we could work with for the future.
"There are opportunities for both companies in this deal and we look forward to bringing them to life."
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