Shares in pub group Marston’s (MARS) gained 7.3% to 74p on Wednesday after the firm agreed terms with Cardiff based SA Brain & Co to operate the latter's portfolio of 156 pubs in Wales, safeguarding 1,300 jobs.
Chief executive Ralph Findlay said, ‘these high-quality pubs are a great fit with our existing estate and will benefit from Marston's scale and operational expertise to further unlock their excellent long-term potential.’
Brains is an iconic family-run business synonymous with pubs and brewing in Wales since 1882. Its freehold estate comprises 86 managed and 55 tenanted pubs in south and west Wales, as well as an estate of 15 leased pubs and bars.
Significant financial pressure heaped on the business by the additional trading restrictions in Wales led Brains to hold collaborative talks with Marston’s to preserve the capital value of the freehold and protect its brand, people and business.
GOOD STRATEGIC FIT
Brains’ portfolio is said to be complimentary to Marston’s existing 106 pubs in Wales comprising a mixture of wet-led community pubs as well as pubs offering accommodation with over 200 bedrooms in prime locations.
The company anticipates that the transaction will be earnings enhancing in the first-year following completion in February 2021, with additional opportunities for growth through the conversion to franchise and other investment opportunities in the medium-term.
Marston’s will operate the pubs under the Brains brand and continue to offer Brains beer. All the roughly 1,300 employees will transfer to Marston’s with an additional incremental overhead spend of around £2 million required to operate the estate.
The estate generated earnings before interest, taxes, depreciation and amortisation (EBITDA) of £14 million pre-Covid-19 with annual rent of £5.5 million which will be charged from April 2021.
