Marston’s exits brewing after 186 years

One of Britain’s best-known pub companies has pulled out of brewing after selling the remainder of its beer business to Carlsberg for £206m.

Marston’s, which brewed beer for 186 years, said on Monday that it had agreed to offload the outstanding 40pc stake in its brewery business as part of a push to focus on pubs.

Money received from the Danish drinks giant will be used to help Marston’s pay down its debts, which have recently been racking up millions of pounds in interest. 

Founded in Burton upon Trent in 1834 by John Marston, the company is best-known for its range of ales, such as Hobgoblin and Pedigree. However, in recent years it has moved increasingly into craft lagers and hasn’t brewed beer independently for four years. 

Marston’s said the sale would enable it to bring its net debt below £1bn “in an accelerated time frame”, reducing its interest costs by around £18m annually. 

Marston’s has worked with Carlsberg since 2020 as part of the Carlsberg Marstons Brewing Company (CMBC) joint venture. The deal announced on Monday will see it relinquish its remaining 40pc stake in CMBC.

Bosses at Marston’s will now focus on running its estate of almost 1,400 pubs, having signed a long-term deal for Carlsberg to keep supplying its pubs with beer. 

It makes Marston’s the latest in a string of traditional brewers to give up on making beer in recent years. Fuller’s sold its brewing business to Asahi in 2019, while Young’s sold its brewing business in 2011.

However, not all have followed this path. Earlier this year Greene King, which owns Old Speckled Hen, announced plans to build a new £40m brewery in Bury St Edmunds that will produce a wide range of beers alongside traditional cask ales.

Justin Platt, chief executive at Marston’s, said: “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.”

Carlsberg’s move for Marston’s came alongside a separate deal for Robinson’s maker Britvic, which it has agreed to buy after submitting an improved £3.3bn offer. A previous bid of £3.1bn was rejected in June, with the latest offer representing a 7.9pc premium on Britvic’s share price last Friday.

The Danish drinks giant said: “Carlsberg’s intention is to accelerate commercial and supply chain investments in Britvic, driving the future growth trajectory of the business.”

Directors at Britvic described the offer as “fair and reasonable”, with the deal still awaiting shareholder approval.

Britvic, which also owns Fruit Shoot, Tango and Lipton Ice Tea, also has a bottling contract with Pepsi. The merged company will be known as Carlsberg Britvic after the deal is complete.

As well as giving Carlsberg access to a huge bottling operation, the deal will also allow it to expand its non-alcoholic drinks operation at a time when young people are drinking less. 

Jacob Aarup-Andersen, chief executive at Carlsberg, said: “We still see the young generations drink alcohol, but they drink it in a different way.

“We are seeing the new generations being more alcohol aware. We are also seeing them being more health conscious. They still enjoy good alcohol products, but they are stepping across different categories, and there is no doubt also a push towards gradually less alcohol.”

More than a quarter of the 18-25-year-olds are teetotal, according to data from alcohol harm charity Drinkaware.

Ian Durant, non-executive chairman of Britvic, said the “strategic merits” of the offer were compelling and provided “shareholders with the opportunity to receive the certainty of cash consideration that reflects the current strength and medium-term prospects of the Britvic business”.

It follows a string of similar deals where London-listed companies have sold for far more than their share price. One of the most extreme examples of such takeovers was when Mars paid a 170pc premium to buy Hotel Chocolat towards the end of last year. 

The brewing giant had been anticipated to come back with a better bid after PepsiCo agreed with Carlsberg that it would preserve its bottling agreement should a takeover happen. 

Mr Durant said: “The proposed transaction creates an enlarged international group that is well-placed to capture the growth opportunities in multiple drinks sectors.”

Durant also added that the agreement with PepsiCo would offer a “strong platform for continued success” that would ensure competitiveness in an increasingly consolidated market amongst bottling partners.