NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE
OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD
CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH
JURISDICTION
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
FOR IMMEDIATE RELEASE
8 July 2024
MARSTON'S PLC TO DISPOSE OF 40% STAKE IN BREWING JV TO BECOME
A FOCUSED PUB BUSINESS
Marston's PLC ("Marston's"[1])
today announces the sale of its remaining non-core brewing assets
to create a business entirely focused on pubs, with a binding
agreement to sell the whole of its 40% interest in Carlsberg
Marston's Limited ("CMBC")
to a subsidiary of Carlsberg A/S ("Carlsberg") (the "Transaction") for £206 million in
cash.
· Value-creating sale of interest in CMBC to Carlsberg for £206
million in cash
· Establishes a purely focused pub business with a strong
position in the UK market and significant opportunities for further
growth
· Delivers on stated de-leverage strategy creating a stronger
balance sheet and a step change in financial flexibility
· Marston's will continue its strong partnership with CMBC
through the long-term brand distribution
agreement which remains in place
· Attractive valuation, representing an enterprise
value[2] multiple of
14.5 times EBITDA[3] and 24.3 times EBIT[4] for the 12-month period ended 31 December 2023
· Net
proceeds[5] used for
significant debt paydown, achieving medium-term target of <£1
billion of net debt (excluding IFRS 16 lease liabilities) in a
significantly accelerated time frame. March 2024 pro-forma adjusted
net debt of c.£959 million[6]
· The
Board of Directors believe that the value to be achieved by the
proposed Transaction represents an attractive result for Marston's
shareholders with the Marston's Group's interest expense to reduce by c.£18 million annually versus
the Board's expectations and the overall outcome earnings accretive
Justin Platt, Chief Executive
Officer, 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.
This deal further strengthens our balance sheet, significantly
reducing our debt by over £200 million. In addition, CMBC remain
valued strategic partners and we continue to benefit from our
ongoing long-term brand distribution
agreement with them. Crucially, it
allows us to become a pure play hospitality business and focus on
what we do best - namely, giving our guests amazing pub
experiences. I look forward to delivering on the opportunities a
focused pub business will provide to ensure we maximise value for
our shareholders."
Focused pub business
The full exit from CMBC will create
a pure play hospitality business focused on pubs whilst retaining
the benefits of a long-term brand distribution agreement with CMBC
as a key supplier and strategic partner.
Pubs are at the heart of UK
socialising, the UK pub market offers significant opportunities to
capitalise on and drive value for shareholders. Marston's pub
business is built on strong fundamentals; a suburban-dominated,
predominantly freehold estate of c.1,370 pubs combined with a
balance of managed and partnership ('franchised'), tenanted and
leased pubs allows the Group to optimise its consumer offering and
deliver a highly cash generative operating model.
This Transaction allows Marston's to
further build on those strong fundamentals and accelerate progress
in driving the success of the pub business and demonstrates
management's preparedness to take decisive steps that will drive
shareholder value. Further detail on Marston's priorities and focus
will be outlined at an investor day in the Autumn.
Sale of CMBC transaction summary
In 2020, CMBC was formed to combine
the strengths of both Marston's and Carlsberg, leveraging
complementary drink portfolios and an extensive distribution
network. Over the last three years, this partnership has played a
significant role in enhancing CMBC's customer offering.
Whilst Marston's believes that CMBC
is well-positioned for future success as a market leader under
Carlsberg's sole ownership, they have been
challenged by a number of unforeseen macro and socio-economic
factors, including Covid-19, higher operating costs and inflation.
Furthermore, as announced on 2 July 2024, the licensed production
and distribution agreement for San Miguel with CMBC in the UK will
not be renewed beyond 31 December 2024.
The attractive upfront cash payment
reflects the breadth of the CMBC brand portfolio. The offer of £206
million is not subject to any value adjustment mechanism and
represents a multiple of 14.5 times EBITDA3 and 24.3
times EBIT4 for the 12-month period ended 31 December
2023. The cash proceeds will provide immediate financial benefits
to Marston's through material debt paydown and ensure that
Marston's can capitalise fully on the opportunities within its core
pub business.
Furthermore, the Transaction removes
the distraction of non-core assets over which Marston's has no
day-to-day operational control and enables further simplification.
The Transaction also removes the corresponding volatility and
uncertainty within Marston's earnings profile.
When taking into account the initial
formation of CMBC, whereby Marston's received proceeds of £267
million[7] and contributed its brewing
assets at a valuation representing a multiple of 12.9[8] times EBITDA for the 12-month period ended 31
December 2019, Marston's will have exited its brewing operations
for a total consideration of £473 million. Additionally, Marston's
has received an incremental £54.8 million[9] of
dividends from CMBC since 2020. Under the
Transaction, no further dividend would be payable to
Marston's.
CMBC will continue to supply
Marston's through the long-term brand distribution agreement (the
"SDA") that was entered
into upon formation of CMBC in 2020. The terms of the SDA have been
updated without material change, to reflect the end of the joint
venture between Marston's and Carlsberg and termination of the
shareholders' agreement relating to CMBC (the "SHA"). Marston's looks forward to
continuing its strong partnership with CMBC as a customer under the
SDA.
The Transaction constitutes a Class
1 transaction for Marston's under the current UK Listing Rules and
is, therefore, as at the date of this announcement, conditional on
Marston's shareholders passing a resolution approving the
Transaction (the "Shareholder
Approval Condition"). The Transaction is not subject to any
other conditions. The Shareholder Approval Condition can be waived
by Marston's (at its discretion) to take account of the fact that
the UK Listing Rules are expected to change in the summer of 2024
in a manner that would mean the Shareholder Approval Condition is
no longer required for Class 1 transactions. If the UK Listing
Rules are amended within an appropriately short time frame,
the directors propose to waive the
Shareholder Approval Condition. If the UK Listing Rules are not amended within an
appropriately short time frame, the directors would seek
shareholder approval for the Transaction. A
further announcement will be made if and when
appropriate.
Completion is targeted before the
end of September 2024 (the long-stop date for completion of the
Transaction is 15 December 2024). In connection with Carlsberg's
proposed acquisition of Britvic plc, as referenced in Carlsberg's
announcement of its firm intention to make an offer for Britvic plc
under Rule 2.7 of the City Code on Takeovers and Mergers separately
released today (the "Carlsberg
Transaction"), Marston's has waived
certain non-compete restrictions under the SHA for the purposes of
the Carlsberg Transaction only for a limited period of time (the
"Waiver"). The Waiver is
not conditional on completion of the Transaction, it is restricted
in time, and it is limited to the Carlsberg Transaction
only.
The Board of Marston's has
unanimously approved the Transaction and believes it is in the best
interest of all of its shareholders.
Key
financial information of CMBC
To assist with the assessment of the
valuation of CMBC and pro-forma impact on Marston's, below is a
summary of the key financials.
|
Marston's historical financials
|
|
|
|
£ million unless otherwise
stated
|
12m to
1-Oct-22
|
12m to
30-Sep-23
|
6m to
30-Mar-24
|
|
Income from CMBC
|
3.3
|
9.9
|
(0.6)[10]
|
|
Dividend from CMBC
|
19.4
|
21.6
|
13.8
|
|
Book value of CMBC
|
260.3
|
250.9
|
220.7
|
Use
of proceeds and financials effects of the
Transaction
Marston's will use the net proceeds
to de-leverage, including paying down the private placement and
banking facilities, following which
Marston's expects the Marston's Group's overall interest expense to
reduce by c.£18 million annually versus the Board's current
expectations.
The Group's £300 million bank
facilities were drawn down by £232 million as at March 2024 and the
private placement is in the sum of £40 million. On a pro-forma
basis, including the net proceeds from the Transaction of c.£202
million (after estimated fees and restructuring costs of c.£4
million), adjusted net debt as at March 2024 would have been c.£959
million6. We do not expect any material tax to be
payable by Marston's.
Consequently, Marston's has achieved
its 2026 net debt (excluding IFRS 16 lease liabilities) target of
<£1 billion in a significantly accelerated timeframe. Marston's
will continue to be focused on debt reduction and be disciplined in
the use of cash to deliver superior returns through focused capital
investment in the estate.
Marston's expects to put financing
in place that is better suited to the new level of leverage in due
course and will update as and when appropriate. In addition, Marston's will provide
an update to the existing capital allocation framework at an
investor day in the Autumn.
The Transaction is expected to be
accretive on adjusted earnings per share when taking into account
the interest cost savings. The Board believes that the Transaction
will support the Group in driving improved performance through
increased financial flexibility and fully aligns and supports the
strategic objective of a focused pub company.
The pro-forma impact on net assets
for Marston's is a reduction of c.£19 million, given book value of
CMBC of £220.7 million at HY 2024 and net proceeds from the
Transaction of c.£202 million after estimated fees and
restructuring costs.
The person responsible for arranging
for the release of this announcement on behalf of Marston's is
Bethan Raybould, General Counsel and Company Secretary.
Advisers
In connection with the Transaction,
J.P. Morgan Cazenove is acting as sole financial adviser and
Sponsor to Marston's, and Slaughter and May is acting as legal
adviser to Marston's.
Enquiries:
Marston's
PLC
Tel: 01902 329 516
Justin Platt, Chief Executive
Officer
Hayleigh Lupino, Chief Financial Officer
Instinctif
Partners
Tel: 020 7457
2020
Justine Warren
Matthew Smallwood
Joe Quinlan
J.P. Morgan
Cazenove
Tel: 020 3493
8000
James Mitford
Dean Schneider
Peel
Hunt
Tel: 020 7418
8900
Dan Webster
Finn Nugent
About Marston's
Marston's is a leading pub operator
with an estate of c.1,370 pubs nationally, comprising managed,
partnership ('franchised') and tenanted and leased pubs. Marston's
employs c.10,000 people.
About CMBC
CMBC is one of the UK's largest
brewers and the leading UK brewer of cask ale. With a brewery and
logistics network covering the whole of the UK, CMBC is a home of
brewing expertise, defined by the combined 300 years of heritage in
beer and strong values.
The portfolio spans World Beer
brands, premium lager and beloved ales, including iconic names,
Carlsberg Danish Pilsner and 1664, alongside cask favourites like
Hobgoblin and Wainwright and rising stars, 1664 Blanc, Poretti and
Brooklyn Craft beers.
With an enviable selection of low
and no alcohol options such as Carlsberg 0.0, Brooklyn Special
Effects and Erdinger Alkoholfrei, CMBC champions exceptional brews
that are exciting drinkers everywhere, whatever their
taste.
Additional information
Sources of financial information
Unless otherwise stated, all
financial information relating to Marston's (including Marston's
share of CMBC) disclosed in this announcement (including the
Appendices) has been extracted, without material adjustment, from
Marston's 2023 and 2022 published audited annual report and
accounts and published unaudited HY 2024 interim
results.
Endnotes:
[1] References to the "Group" or the "Marston's Group" mean Marston's PLC (or
the "Company"), its
subsidiaries, as defined in the Companies Act 2006, and its
subsidiary undertakings from time to time.
[2] Enterprise value calculated
based on cash consideration of £206 million plus Marston's 40%
share of CMBC's unaudited pre-IFRS 16 net debt as of 31 December
2023 of £72.5 million, as per CMBC's internal financial accounting
records as reported to Marston's (extracted without material
adjustment).
[3] Marston's 40% share of
CMBC's unaudited pre-IFRS 16 underlying EBITDA for the 12 months
ending 31 December 2023 of £40.5 million, calculated from CMBC's
internal financial accounting records as reported to Marston's
(extracted without material adjustment).
[4] Marston's 40% share of
CMBC's unaudited pre-IFRS 16 underlying EBIT for the 12 months
ending 31 December 2023 of £24.2 million, calculated from CMBC's
internal financial accounting records as reported to Marston's
(extracted without material adjustment).
[5] Net proceeds of c.£202
million after estimated fees and restructuring costs of c.£4
million (excludes costs of Class 1 circular).
[6] Net debt (excluding IFRS 16
leases) of £1,160.9 million extracted from Marston's published
unaudited HY 2024 interim accounts, without material adjustments,
minus net proceeds of c.£202 million.
[7] Proceeds include the
upfront payment of £239 million (£273 million less the £34 million
contingent payment) as per the announcement on 22 May 2020 and the
contingent payment of £28 million received as per Marston's
published audited 2022 annual report and accounts.
[8] As per publicly announced
valuation of £580 million, net of the £6 million lower contingent
payment which is the difference between the £34 million announced
contingent payment on 22 May 2020 and the £28 million received as
per Marston's published audited 2022 annual report and accounts,
and EBITDA of £44.6 million on 22 May 2020.
[9] Includes dividend received
from CMBC as disclosed in Marston's published audited 2023 annual
report and accounts. As well as the dividend received from CMBC as
disclosed in Marston's published unaudited HY 2024 interim
results.
[10] Underlying income of
(£0.6 million) for 6 months to 30 March 2024. Statutory income was
(£16.6 million) for the period.
APPENDIX I
MATERIAL CONTRACTS
1.
The Group
1.1.
Transaction Agreements
(A) Share purchase
agreement
Parties and structure
The Disposal is governed by the
share purchase agreement ("Share
Purchase Agreement") entered into between Marston's,
Marston's Trading Limited ("MTL"), Carlsberg UK Holdings Limited
("CUKH"), Carlsberg
Breweries A/S and CMBC (the "Parties"). Pursuant to the Share
Purchase Agreement, subject to the Shareholder Approval Condition,
MTL has agreed to sell and CUKH has agreed to purchase 64 ordinary
shares of £1 each in the capital of CMBC (representing MTL's entire
shareholding in CMBC, being 40% of the issued share capital of
CMBC) (the "Sale
Shares"). Following
completion under the Share Purchase Agreement, CMBC will become a
wholly owned subsidiary of CUKH.
Condition
As the Transaction constitutes a
Class 1 transaction for Marston's under the current UK Listing
Rules, completion of the sale and purchase of the Sale Shares
pursuant to the terms of the Share Purchase Agreement is
conditional on the Shareholder Approval Condition. The Transaction
is not subject to any other conditions. If the Shareholder Approval
Condition is not satisfied or waived before 15 December 2024 (being
the "Long Stop Date"), then
the Share Purchase Agreement shall terminate. Pursuant to the Share
Purchase Agreement (and as further described in the above section
"Sale of CMBC transaction
summary"), the Shareholder Approval Condition may be waived
by MTL at its sole discretion to take account of the fact that the
UK Listing Rules are expected to change in the summer of 2024 in a
manner that would mean the Shareholder Approval Condition is no
longer required for a Class 1 transaction.
Waiver
In addition (also as further
described in the above section "Sale of CMBC transaction summary"),
Marston's has granted the Waiver to Carlsberg and CUKH pursuant to
the Share Purchase Agreement in connection with the Carlsberg
Transaction. The Waiver is limited to the Carlsberg Transaction
only, and will immediately cease to have effect if the Carlsberg
Transaction does not complete by 1 August 2025 or is completed for
a total enterprise value of less than £1,000 million. The Waiver is
not conditional on completion under the Share Purchase
Agreement.
SHA
The Parties have agreed that the SHA
will terminate subject to, and conditional upon, completion under
the Share Purchase Agreement.
Consideration
The consideration payable by CUKH
for the Sale Shares at completion is £206 million in cash (the
"Consideration"). The
Consideration is not subject to any value adjustment
mechanism.
Warranties and Indemnities
MTL has given limited customary
fundamental warranties relating to its title to the Sale Shares,
each of which shall be repeated at completion of the Share Purchase
Agreement. All Parties have also given customary limited
fundamental warranties relating to capacity and
solvency.
CUKH has agreed to indemnify the
Group for any losses suffered or incurred in respect of the
Carlsberg UK Limited Pension Scheme (or any member of such scheme)
for a period of six years from completion under the Share Purchase
Agreement (the "Pensions
Indemnity").
Guarantees
Marston's has agreed to guarantee
all of MTL's obligations, commitments and undertakings arising
under or in connection with the Share Purchase Agreement. In
addition, Carlsberg Breweries A/S has agreed to guarantee all of
CUKH's obligations, commitments and undertakings arising under or
in connection with the Share Purchase Agreement (including the
Pensions Indemnity).
Governing law and jurisdiction
The Share Purchase Agreement is
governed by English law. The English courts will have exclusive
jurisdiction to settle any dispute arising out of or in connection
with the agreement.
(B) Deed of
Amendment in relation to the Supply Distribution
Agreement
Parties and structure
CMBC and MTL entered into the SDA on
the date of completion of the joint venture (30 October 2020) for a
term of up to 20 years (as amended by a consumables termination
notice entered into by CMBC and MTL on 24 June 2022). The SDA
governs the terms for the supply and distribution by CMBC of drinks
products and related services to MTL. It is intended that the SDA
will remain in place on substantially the same terms subject to the
key amendments set out below. In order to reflect the end of the
joint venture between MTL and CUKH and the termination of the SHA,
CMBC and MTL have agreed to amend the SDA pursuant to a deed of
amendment (the "SDA Deed of
Amendment"), that will be entered into and become effective
at completion of the Share Purchase Agreement.
The SDA Deed of Amendment provides
for a non-material amendment to a customer KPI, and the inclusion
in the SDA of certain termination rights that are otherwise
included in the SHA (that will terminate on completion of the Share
Purchase Agreement) to be granted to both parties to the SDA. In
respect of termination following a change of control of either
party, the other party can terminate the SDA provided that such
rights must be exercised within six months of the relevant change
of control taking place in order to be effective and termination
will take effect within a set period of time after the relevant
termination notice is served (such period of time to vary depending
on the identity of the new controller). The SDA Deed of Amendment
also provides for CMBC to have an immediate termination right under
the SDA (in line with exit rights otherwise included in the SHA) if
certain customer targets are not met by MTL within an agreed
tolerance.
Following service of any such
termination notices, (or following termination or expiry of the SDA
in any other circumstance) CMBC is obliged to support MTL with the
transition to an alternative logistics supplier.
1.2.
Marston's Licence Agreement
Marston's and CMBC entered into the
Marston's licence agreement on the date of completion of the
joint venture (30 October 2020) (the "Marston's Licence Agreement"). The
Marston's Licence Agreement ensures that CMBC perpetually licenses
to Marston's (subject to some limited termination rights) certain
intellectual property which was contributed to CMBC by the Group in
connection with the original joint venture for the purposes set out
below.
Under the Marston's Licence
Agreement, CMBC licenses to Marston's on a royalty-free, worldwide basis:
(i) certain word and device marks relating
to the "Marston's" name, including the "Marston's" and "Marston's
Brewery" trade marks and the "three barrels" device mark, for use
in connection with the operation of a hospitality,
telecommunications and/or property development business; and (ii)
certain other trade marks contributed to CMBC, primarily the beer
brands "Jennings" and "Banks's", for use in connection with the
operation of a hospitality business.
This licence from
CMBC to Marston's is
exclusive in the fields set out at (i) and (ii) above, such that
only the Group can use the licensed trade marks within those
exclusive fields. Although the Group no longer exercises direct
control over the "Marston's" name, CMBC
is required, pursuant to the Marston's
Licence Agreement, to maintain and prosecute the licensed marks
(including "Marston's") at Marston's cost.
The Marston's Licence Agreement
shall continue in full force and effect notwithstanding the
Transaction.
1.3.
Private Placement
In November 2019, the Company issued
£40 million of privately placed debt (the "Private Placement") which sits
pari passu with Marston's
bank lending. There is a fixed rate of interest paid quarterly over
the term of the Private Placement, with a bullet repayment on
maturity. On 30 March 2023, Marston's successfully secured an
amendment and extension to the Private Placement to the end of
January 2025.
1.4.
Banking facilities
Marston's has access to certain
banking facilities. On 13 May 2024, Marston's successfully secured
an amendment and extension to its existing banking facility, which
was due to expire in January 2025. The revised £340 million of
funding comprises a £300 million bank facility, maturing in July
2026, and an additional £40 million bank facility with a maturity
of up to July 2026, drawings of which must be used to repay the
Private Placement.
2.
CMBC
Save for: (i) the Share Purchase Agreement; (ii) the SDA (as shall be
amended by the SDA Deed of Amendment); and (iii) the Marston's
Licence Agreement, each as more particularly described above, no
contracts have been entered into (other than contracts entered into
in the ordinary course of business) by CMBC, either: (i) within the
two years immediately preceding the date of this announcement which
are or may be material to CMBC; or (ii) at any time, which contain
any provision under which CMBC has any obligation or entitlement
which is or may be material to CMBC as at the date of this
announcement.
APPENDIX II
RISK FACTORS
Shareholders of Marston's ("Shareholders") should carefully
consider, together with all other information contained in this
announcement, the specific factors and risks described
below.
The Company considers these to be the known material risk
factors relating to the Transaction for Shareholders to
consider. There may be other risks of
which the Board is not aware or which it believes to be immaterial
which may, in the future, be connected to the Transaction and have
a material and adverse effect on the business, financial condition,
results of operations or future prospects of the
Group.
The risks described below are only those which: (i) are
material risk factors relating to the Transaction; (ii) will be
material new risk factors to the Group as a result of the
Transaction; or (iii) are existing material risk factors to the
Group which will be impacted by the Transaction. Note that the risk
factors are set out in order of materiality within each
section.
1. Material
risk factors to the Transaction
1.1. The Transaction not coming
into effect
Pursuant to the Share Purchase
Agreement, completion of the Transaction is conditional upon the
Shareholder Approval Condition. The Shareholder Approval Condition
may be waived by MTL acting in its sole discretion, to take account
of the fact that the UK Listing Rules are expected to change in the
summer of 2024 in a manner that would mean the Shareholder Approval
Condition is no longer required for Class 1 transactions. If the UK
Listing Rules are amended within an appropriately short time
frame, the directors propose to waive
the Shareholder Approval
Condition. If the UK Listing Rules are not
amended within an appropriately short time frame, the directors
would seek shareholder approval for the
Transaction.
There can be no assurance that the
Shareholder Approval Condition will be satisfied or waived and
accordingly, that completion will take place. If the Transaction
does not complete in accordance with the terms of the Share
Purchase Agreement, any of the risks and uncertainties set out in
sections 1.2-1.3 of this Appendix II (Risk Factors) may adversely affect the
Group's business and results.
1.2. Inability to realise
shareholder value
The Board believes that the
Transaction is in the best interests of the Group and of its
Shareholders as a whole, and that it currently provides the best
opportunity to realise an attractive and certain value for
Marston's interest in CMBC. If, therefore, the Shareholder Approval
Condition is not satisfied or waived as applicable and the
Transaction does not complete, the Company will not receive the
cash proceeds from the disposal of its 40% interest in CMBC (the
"Disposal") and will forgo
the other anticipated benefits of the Transaction as described in
this announcement.
In particular, the Board intends to
use the net proceeds of the Transaction to de-leverage, including
paying down the Private Placement and banking facilities. Following
these actions, Marston's expects that: (i) the Marston's Group's
overall interest expense would reduce by c.£18 million vs. the
Board's current expectations; and (ii) it would accelerate the
attainment of its 2026 net debt target of <£1 billion.
If the Shareholder
Approval Condition is not
satisfied or waived as
applicable, the Transaction will not
complete, and these benefits will not be realised, with Marston's
remaining less financially flexible.
1.3. Potentially disruptive
effect on the Group and CMBC
If the Transaction does not come
into effect, this may lead to management and employee distraction
due to perceived uncertainty as regards the future of Marston's
interest in CMBC, and the future of CMBC more generally. Both the
Group and the Carlsberg group have committed significant time and
resources to the Transaction. As a result, other business
opportunities may have been missed or insufficiently executed which
may not be rectifiable if the Transaction does not come into
effect. In addition, the media could portray the non-completion of
the Transaction as a strategic failure of the Group which could
erode confidence among investors and stakeholders.
Further, in circumstances where
Marston's has subsequently attempted to exit the joint venture
unsuccessfully, investors and stakeholders might conclude that
Marston's continued interest in CMBC is unsustainable. This
uncertainty as to Marston's commitment to the joint venture and the
future of its interest in CMBC (and CMBC more generally) might lead
suppliers and customers of CMBC to feel it is not in their
commercial interests to continue to do business with CMBC. This
uncertainty might also lead to the departure of certain members of
staff of CMBC or a drop in performance levels of such members of
staff, which may have an effect on the ability of CMBC to adapt and
innovate to meet future commercial challenges.
The failure to implement the
Transaction may therefore have an adverse effect on the performance
of CMBC and its value to the Group (including a likely impairment
of its investment in CMBC), and may also adversely affect Marston's
share price.
2. Material
new risk factors to the Group as a result of the
Transaction
2.1. Financial risks for the
Group in relation to its exit from the joint venture alongside
Carlsberg
The Marston's Group will forgo
future returns from the joint venture, to the extent such returns
were available and this may adversely affect the Group's business
and its results. As set out in the above section "Key financial information of CMBC",
underlying income received from CMBC was £9.9 million for the
financial year ended 30 September 2023. Dividends received from
CMBC totalled £21.6 million for the financial year ended 30
September 2023. The declaration and payment of any dividend is
always dependent on the directors' assessment of the profits that
the joint venture has available for distribution to its
shareholders at the relevant time.
2.2. The Group's operations will
be less diversified and more susceptible to specific
risks
Following the Transaction, the
Group's business will be less diversified, and its overall
financial performance will be dependent on the retained pub
business alone. Risks impacting the pub sector more generally or
specific issues arising in the retained pub and accommodation
business will accordingly have a proportionately greater adverse
impact on the financial condition of the Group, and have the
potential to create a greater risk of share price volatility
following the Transaction.
2.3. Waiver of certain rights
under the SHA
As further described in the above
section "Sale of CMBC transaction
summary", Marston's has granted the Waiver to Carlsberg and
CUKH pursuant to the Share Purchase Agreement in connection with
the Carlsberg Transaction. The Waiver is effective on signing of
the Share Purchase Agreement and is not conditional on completion,
and so even if the Transaction does not complete (because, for
example, the Shareholder Approval Condition is not satisfied or
waived), Carlsberg will still be permitted under the terms of the
Waiver, to pursue the Carlsberg Transaction for a specified period
of time. There is therefore a risk that Carlsberg may acquire
Britvic plc whilst Marston's remains a joint venture partner in
CMBC, which may result in reduced commitment and resources from
Carlsberg in the success of the joint venture and/or undermine
customer or supplier confidence in the joint venture. The Waiver is
limited in time and specific to the Carlsberg
Transaction.
2.4. Termination of the SHA and
amendments to the SDA
The SHA will terminate on completion
of the Transaction. The SDA will continue on substantially the same
terms, save that it will be amended to include certain termination
events that were previously in the SHA (as further described in
paragraph 1.1(B) of Appendix I (Material Contracts)). In particular,
the SDA (as amended by the SDA Deed of Amendment) can be terminated
by one party if the other party suffers a change of control event.
If the Transaction proceeds, the SDA (as amended) will therefore
include certain additional termination events which it did not
previously contain.
3. Existing
material risk factors to the Group which will be impacted by the
Transaction
3.1. Carlsberg UK Limited
Pension Scheme liabilities
Carlsberg's UK defined benefit
pension scheme, the Carlsberg UK Limited Pension Scheme (the
"Carlsberg Scheme"), falls
within the joint venture perimeter.
The most recent full actuarial
valuation of the Carlsberg Scheme was carried out as at 5 April
2022. As at that date, the Carlsberg Scheme had assets with an
estimated market value of £658 million and liabilities with an
estimated value of £719 million (valued using ongoing technical
provisions basis assumptions agreed with the scheme's trustee as
part of the valuation). An estimated update as at 31 December 2023
indicated assets valued at £462 million and liabilities of £499
million. The next full valuation is due as at 5 April
2025.
Under the UK pension scheme funding
regime, two Carlsberg entities which were contributed to CMBC
(Carlsberg UK Limited and Carlsberg Supply Company UK Limited) have
primary liability for funding the Carlsberg Scheme. However, all
companies within the Group are also technically within the scope of
certain powers of the UK Pensions Regulator should the Pensions
Regulator exercise its powers in relation to the Carlsberg Scheme,
and will remain so notwithstanding completion of the Transaction.
There is therefore an ongoing risk that companies in the Group may
incur liabilities in respect of the Carlsberg Scheme in the
future.
The Share Purchase Agreement
provides for Carlsberg to indemnify the companies in the Group
against any amounts required to be paid to the Carlsberg Scheme for
a period of six years from completion of the Transaction. The Board
is satisfied that this indemnity is appropriate in the context of
the Transaction, and that it adequately retains the protections
made available to the Marston's Group under the SHA in respect of
the aforementioned risk.
APPENDIX III
SIGNIFICANT CHANGE IN THE ISSUER'S FINANCIAL
POSITION
1. The
Group
There has been no significant change
in the financial performance or financial position of the Group
since 30 March 2024, being the end of the last financial period for
which financial information of the Group has been
published.
2.
CMBC
Apart from the announcement
regarding San Miguel as set out in this announcement, there has
been no significant change in the financial performance or
financial position of CMBC since 30 March 2024, being the end of
the last financial period for which financial information of CMBC
has been published.[11]
APPENDIX IV
LEGAL AND ARBITRATION PROCEEDINGS
1. The
Group
There are no governmental, legal or
arbitration proceedings (including any such proceedings which are
pending or threatened of which Marston's is aware) during a period
covering the 12 months prior to the date of this announcement which
may have, or have had in the recent past, a significant effect on
Marston's and/or the Group's financial position or
profitability.
2.
CMBC
There are no governmental, legal or
arbitration proceedings (including any such proceedings which are
pending or threatened of which CMBC is aware) during a period
covering the 12 months prior to the date of this announcement which
may have, or have had in the recent past, a significant effect on
CMBC and/or CMBC's financial position or profitability.
APPENDIX V
RELATED PARTY TRANSACTIONS
1. Related
party transactions
Save as disclosed in: (i) note 12 on
page 22 of the HY 2024 Results; (ii) note 12 on pages 124 and 125
of the 2023 Annual Report; and (iii) note 12 on page 136 of the
2022 Annual Report, the Company has not entered into any related
party transactions (within the meaning ascribed to that term in
UK-adopted international accounting standards) during any of the
financial years ended 1 October 2022, 30 September 2023 and
otherwise up to the date of this announcement.
IMPORTANT NOTICES
No statement in this announcement is intended as a
profit forecast and no statement in this announcement should be
interpreted to mean that the future earnings per share, profits,
margins or cash flows of Marston's following the Transaction will
necessarily match or be greater than the historical published
earnings per share, profits, margins or cash flows of
Marston's.
This announcement may include statements that are, or
may be deemed to be, "forward-looking statements". These
forward-looking statements may be identified by the use of
forward-looking terminology, including the terms "believes",
"estimates", "plans", "projects", "anticipates", "expects",
"intends", "may", "will" or "should" or, in each case, their
negative or other variations or comparable terminology, or by
discussions of strategy, plans, objectives, goals, future events or
intentions. Forward-looking statements may and often do differ
materially from actual results. Any forward-looking statements
reflect Marston's current view with respect to future events and
are subject to risks relating to future events and other risks,
uncertainties and assumptions relating to Marston's business,
results of operations, financial position, liquidity, prospects,
growth and strategies. Forward-looking statements speak only as of
the date they are made.
You are advised to read this announcement in its
entirety for a further discussion of the factors that could affect
Marston's future performance. In light of these risks,
uncertainties and assumptions, the events described in the
forward-looking statements in this announcement may not occur.
This announcement does not constitute and should not
be construed as, an offer to purchase or sell or issue securities,
or otherwise constitute an inducement, invitation, commitment,
solicitation or recommendation to any person to purchase, subscribe
for, or otherwise acquire securities in Marston's, or constitute an
inducement to enter into any investment activity in any
jurisdiction. Nothing contained in this announcement is intended
to, nor shall it, form the basis of, or be relied on in connection
with, any contract or commitment whatsoever and, in particular,
must not be used in making any investment decision.
The distribution of this announcement in or from
certain jurisdictions may be restricted or prohibited by the laws
of any jurisdiction other than the UK. Recipients of this
announcement are required to inform themselves of, and comply with,
all restrictions or prohibitions in such other jurisdictions. Any
failure to comply with applicable requirements may constitute a
violation of the laws and/or regulations of such other
jurisdictions.
This announcement has been prepared for the purposes
of complying with the applicable law and regulation of the UK
(including the UK Listing Rules and the Disclosure Guidance and
Transparency Rules) and the information disclosed may not be the
same as that which would have been disclosed if this announcement
had been prepared in accordance with the laws and regulations of
any jurisdiction outside of the UK.
Save as required by the Market Abuse Regulation, the
Disclosure Guidance and Transparency Rules, the UK Listing Rules or
by applicable law, each of Marston's and J.P. Morgan Cazenove
expressly disclaim any intention, obligation or undertaking to
update, review or revise any of the information or the conclusions
contained herein, including forward-looking or other statements
contained in this announcement, or to correct any inaccuracies
which may become apparent whether as a result of new information,
future developments or otherwise.