Marston’s (LON: MARS) Snubs Offer from Beverly Hills-Based PE Group

Summary

  • Marston’s had unanimously rejected all three takeover offers from Platinum Equity as it believes that the business has been undervalued.
  • The US-based PE group can make another formal offer until 26 February under the UK takeover code rules for the fourth time.

UK-based pubs and beer brewing business Marston’s Plc (LON: MARS) has rejected a £693-million offer from Platinum Equity, a Beverly Hills-based private equity group, as it felt the offer undervalued the business. It has been the third time that the Platinum group has made an all-cash proposal since December.

According to the US-based private equity group’s proposal, Marston’s was offered 105p per share. The company board and advisers unanimously rejected the proposal as they felt that Marston’s business has been undervalued by the private equity firm. Earlier, Marston’s received two proposals at 88 pence and 95 pence per share in December 2020 and turned them down. After this move, Platinum can make another formal offer until 26 February under the UK takeover code rules for the fourth time.

The UK-based pub company said that the latest proposal represents a one-fifth discount to the share price of the company at the start of 2020 (pre-Covid-19 times). The company has evolved since then and transformed into Carlsberg Marston's Brewing Company, which is a joint venture with Carlsberg. The JV has already realised a significant amount of value on completion and is expected to carry the momentum in the future.

In December 2020, the UK-listed brewing company announced to takeover struggling 156 Brains pubs estate in South and West Wales as the lockdowns, imposed during the crucial festive season, hammered the ailing business. Notably, Marston’s was itself under huge pressure as the Covid-19 induced lockdowns hammered its sales and it had been seeking government support to bail out the sector. Marston’s believed that the takeover will not only protect jobs but would also be accretive to company’s earnings.

Also read: Pubs and Bars Call for Government Support Amid the New Social Distancing Norms

Despite the pandemic induced lockdowns ripping the sector, Marston managed to remain afloat and sustain through the unprecedented challenges presented by the Covid-19. The company gained strength from the freehold property assets its holds. Despite forging a successful JV with Carlsberg that resulted in a cash injection of £273 million, the company was forced to make more than 2,000 jobs redundant, which accounts to 20 per cent of its workforce in October 2020.

As the UK has expedited the Covid-19 vaccination programmes, the lockdown restrictions could be lifted soon, and pubs and hospitality businesses can be expected to breathe a new lease of life. Investors can also have better visibility of as margins are expected to improve beyond pre-pandemic levels. Shares of the Marston’s group rallied by more than 6 per cent to GBX 87.3 on Monday.

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