People socialising in a pub
Marston’s disposes of brewing joint venture / Image source: Adobe
  • Brewing joint venture sold for £206 million
  • Accelerates timeframe to reduce net debt
  • Company to layout capital allocation plans

It was drinks all round for Marston’s (MARS) after the pub and hotel group announced the sale of its remaining 40% stake in the Carlsberg Marston’s Brewing joint venture back to Danish brewer Carlsberg (CARL-B:CPH) for £206 million in cash.

The shares jumped as much as 18% to 37p, close to the highs for the year, while Carlsberg’s shares traded 3% higher as the brewer also sweetened its offer for soft drinks company Britvic (BVIC).


The sale transforms Marston’s into a pure-play hospitality business while the cash injection represents a step change in the group’s ambition to deleverage its balance sheet and provides increased financial flexibility.

The net proceeds of £202 million will allow for a significant debt paydown which accelerates the timeframe for achieving the group’s medium-term target of reducing net debt below £1 billion.

Effective net debt is reduced to circa £959 million which is anticipated to save around £18 million in interest payments. This compares with a forecast £12 million after-tax profit contribution from the joint venture in 2024.

The full exit will not affect the long-term brand distribution agreement, with Carlsberg remaining a key supplier and strategic partner.

Chief executive Justine Platt commented: ‘Today's announcement represents a significant milestone for Marston's as we realise our stake in CMBC.

‘In my first six months with the business, it has become very clear to me that our core capability and key opportunity to unlock value for shareholders is in driving a focused and successful pub business.’

The company will update shareholders on its capital allocation framework at an investor day in the Autumn.


Analyst Greg Johnson at Shore Capital said the deal creates a cleaner business with greater visibility on earnings and increased financial flexibility.

‘At the headline level, we see it broadly neutral on EPS (earnings per share), modestly dilutive on free cash flow and NAV, (net asset value) but significantly enhancing balance sheet metrics, with Marston’s destiny now very much in management's hands.

‘We see EPS building to 8p in FY25F, strong underlying cash generation and further deleveraging’, Johnson added.

Anna Barnfather at Panmure Liberum said: ‘Although the deal is below £220.7 million book value, we see this as strategically positive in accelerating de-leveraging.’

Analysts at Goodbody commented: ‘Importantly, the lower level of leverage will enable management to focus on executing against the growth opportunities within the pub portfolio.’


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Issue Date: 08 Jul 2024