FDBusiness.com

Marston’s, the UK beer and pubs group, has agreed to acquire the Charles Wells brewing business from the Charles Wells Group for a cash consideration of £55 million, plus working capital adjustments. Based in Bedford, Charles Wells Brewing and Beer Business has 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 this 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.

The Charles Wells Brewing and Beer Business acquisition complements the existing Marston’s Beer Company strategy by extending its number 1 position in the premium bottled ale and cask ale markets, and enhancing its share of the premium canned market. The acquisition also strengthens Marston’s presence in London and the South East and presents a platform to expand into Scotland. Furthermore, it develops Marston’s licensed brands business and expands the group’s production capabilities to include lager brewing and canning, whilst improving production and distribution efficiency.

For the financial year ended 30 September 2016, Charles Wells Brewing and Beer Business generated revenues of £92 million, EBITDA of £6 million, operating EBIT of £5 million on a 52 week basis and net tangible assets of £36 million. Marston’s estimates it can generate operational improvements similar to those achieved in previous acquisitions and has identified potential costs savings of £4 million by financial year 2019, with the majority being realised in financial year 2018.

Marston’s Beer Company has pursued a consistent strategy over the last five years to become the UK’s leading premium beer business. Today, MBC has an experienced senior team and holds leading market share in both the premium bottled and premium cask ale markets. MBC takes a local approach to its brewing capabilities via its portfolio of five regional breweries located throughout England and has recently extended its focus to licensed brands, including Shipyard, which is now the number 2 craft beer in the UK, as well as the Warsteiner, Kruzovice and Kingstone Press brands.

MBC has also successfully enhanced shareholder value through acquisitions, most recently through the £25 million purchase of the Thwaites beer business in 2015. Since acquisition the Thwaites beer brands have performed strongly, delivering synergies in line with expectations and returns well in excess of the group average.

Marston’s intends to finance the acquisition from the proceeds of an equity placing, which represents 9.9% of Marston’s issued share capital. Completion of the acquisition is expected in June 2017, following completion of the appropriate consultation procedures.

Ralph Findlay (pictured above), chief executive of Marston’s, comments: “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. 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.”