Carlsberg UK and Marston’s reveal plans for £780m JV

Carlsberg UK and Marston’s have announced a proposed deal to form a 60:40 joint venture in the UK, Carlsberg Marston’s Brewing Company.

The agreement, if finalised, will see both companies inject their brewing and distribution assets into the new beer company, which will have a combined value of £780 million.

At completion, Carlsberg will pay up to £273 million to Marston’s, £34 million of which will be a deferred contingent payment. Carlsberg will consequently become the controlling shareholder, owning a 60% stake in the joint venture.

The Carlsberg Marston’s Brewing Company will bring together international, national and regional beer brands from the two companies’ portfolios.

On Carlsberg’s side, this includes names such as Carlsberg Danish Pilsner, Carlsberg Expørt, Tetley’s, Somersby cider, and San Miguel – for which Carlsberg  has the UK licence. The Marston’s portfolio features Marston’s Pedigree, Hobgoblin, the Banks’s brand, and the UK licence for Estrella Damm, among other names.

The deal will see the JV benefit from access to the Marston’s 1,400-strong pub estate for its beer portfolio through a long-term strategic partnership.

Likewise, the new company will be able to leverage Marston’s Beer Company’s wide distribution network, spanning the independent free trade, other pub companies, the off-trade, and export.

The transaction is expected to complete in the second half of 2020, subject to competition clearance and approval from Marston’s shareholders.

“The creation of the joint venture is an important step forward for our UK business,” said Carlsberg Group CEO, Cees ’t Hart.

“The joint venture’s brand portfolio will allow us to offer a significantly stronger beer portfolio to our UK customers, and at the same time extend distribution into the Marston’s pub estate.

“In addition, the combined business will bring our customers wider choice, greater capacity, product innovation, and marketing and distribution efficiency benefits.”

Following the creation of the JV company, Marston’s will predominantly focus on its pub and accommodation business. The firm says that the cash equalisation payment from Carlsberg will ‘materially’ reduce company debt and afford it greater financial flexibility.

Ralph Findlay, Marston’s CEO, said: “Marston’s will play a key role in the prospects of the combined entity which represents an exciting new chapter in Marston’s established brewing heritage and future potential, whilst enabling it to further reduce its debt and focus on maximising value from its high quality pub estate.”

At the end of last year, Marston’s revealed it had agreed to divest 137 pubs for £44.9 million to UK pub operator Admiral Taverns, as part of a strategy to reduce debt.

Commenting at the time, Findlay said the company planned to reduce its net debt by £200 million by 2023, in part through the disposal of non-core assets.