Marston's Share Discussion Threads

[lord gnome] 20/5/2017 18:58

A 'Buy' verdict from Investors Chronicle online version yesterday. No doubt it will appear in next week's print version. I don't expect it to produce any fireworks, but it's nice to have them on our side.

[lord gnome] 19/5/2017 17:46

Marstons has done a super deal here and once the placing has cleared the shares will move ahead strongly. Management had clearly done its homework and the combination of cost savings, extra turnover and geographical spread, the larger brewing capacity and the canning line all add up. Not quite transformational, but a very good deal indeed. Very happy to hold, even if my addition yesterday could have been better timed.

[speedsgh] 19/5/2017 16:32

On debt/leverage...

[CEO Ralph Findlay]: "On the leverage point, we have consistently said for a number of years that it was our objective to reduce leverage over time. We did not set a debt reduction target, but we said we would reduce leverage over time, and that doesn't change. I think one of the attractions of funding this deal, or combination deals, the way we did was to be able to achieve that without earnings dilution at the same time on issuing equity. That is an attraction. We do acknowledge that there are investors in the market who say your leverage looks high. Not everybody does, but there are some who do. This is one way to say yes, we can hear what you say. We're listening to that point. We can do this and reduce leverage."

[CFO Andrew Andrea]: "Yes. And just to remind you all, we are more focused on fixed charge cover improving than leverage reducing because lease accounting is coming around the corner and pubs -- pub groups with a very high leasehold mix, I think you'll see that playing field leveled somewhat. We are still 95% freehold."

[11_percent] 19/5/2017 15:47

This is going nowhere.

[speedsgh] 19/5/2017 15:45

richie - Many thanks. A v interesting read...

"The Charles Wells brewing and beer business that we have announced we are acquiring today includes good brands with national resonance, including Bombardier, the Young's brands, Courage, including Directors and McEwan’s. There are also some good licensed international brands of which I would say the key is Estrella Damm, and there is a well invested brewery in Bedford, which is a freehold site spanning about 16 acres. At the same time, we've entered into a 10-year supply agreement with the ongoing Charles Wells pub business. The key thing is really not just what we're going to do with that business in terms of cost savings, of which there will be about GBP 4 million, but it is how are we going to set about growing that business and using it to -- as a platform to develop Marston's Beer Company in future.

The first point is that we will use it to further expand our #1 position in the U.K. premium beer market, and there are 2 key areas we will aim to do that. One is to improve our existing free-trade presence in London in the Southeast through the Bombardier, Courage and Young's beer brands, and the second will be for the first time to set up a free-trade operation in the Scottish market using the McEwan's brands as a platform to do that. The licensed brands will also be important and we think that the Charles Wells team have done a really good job in developing the license brand business at Charles Wells, and Estrella Damm is a brand that we think has got good opportunity in the U.K. market. It is a Catalan premium lager and we would see it sitting in comparable terms to Peroni in the U.K. sector.

The final point on supply chain is again really important. This acquisition brings with it a large lager brewery. We haven't currently got lager brewing capability so we will have that in future. There is a canning line, which carries out contract work for other brewers. We were on the verge of committing a GBP 6 million investment to a canning line in Burton-on-Trent to do just that, which we will no longer have to invest. And finally, it will make a difference to our cost of distribution. And this point was really amplified by the contracts that we reported on the statement today, one being the winning of the distribution contract for Punch B which is an exclusive contract which will apply from the 1st of September this year, and the second was the -- a similar contract on an exclusive basis for Hawthorn Leisure. And between those 2 contracts, those will add about 1,600 to 1,700 distribution points to our supply chain and enable us to have our brands listed across those pubs at the same time. And the key point is that the Charles Wells acquisition will make those contracts even more effective.

What the acquisition will do for our market share is to increase our share of the total ale market from a current 11% to 16%; our share of the premium cask ale market to about 25%; the premium bottled ale share will go to 29%; and canned ale will go to 12%."

[fangorn2] 18/5/2017 20:15

@Jeffian,

Perhaps "turn around" not apt - squeeze more juice out more appropriate perhaps?

Debt a concern though yes..especially as interest rate cycle has turned imo

[spacecake] 18/5/2017 19:51

What will Charles Wells do with the £55 mill from Marstons,... build another brewery of course ... !!!

“We are planning to set up a smaller brewery in the town over the next couple of years and we are already looking at sites,” said a spokesman.

[rmillaree] 18/5/2017 17:29

I take the viewpoint the for a company like Mars you almost can't have too many brands, ok some won't work but if they can take another brand and cross sell even to a small segment of what they have already even as a backup second choice tipple they should make this work. The brand names do have a few in there that you see round the doors so seems like a good deal to me - Banana Bread Beer officially added to my future beer tasting wishlist
hxxp://www.charleswells.co.uk/our-company/our-products/

[jeffian] 18/5/2017 16:05

Fangorn2,

Turn what round? It isn't that the business is failing, it's just that its low-margin manufacturing in a declining sector (ale). They already own some of the best brands around; when you're selling Pedigree, I don't see what adding Youngs or Bombardier to the range will add. It's just as likely that some will switch from one to the other!

Greene King is a "well run business". This lot just plod along in a rather old-school way and are a bit dozy. After the 2007/8 crunch, they were quick to cut the divi and upset the City by springing an unexpected and deeply diluting Rights Issue on them. I'm not one of the ones to be upset about the size of their debt but the way in which it was structured with stepped-up interest rates and penalties was none too clever. Performance is "pedestrian" as evidenced by the share chart and I don't expect that to change any time soon. This acquisition certainly doesn't change my opinion.

[lord gnome] 18/5/2017 15:26

Bah! Not the best of timing with this morning's purchase.

[fangorn2] 18/5/2017 15:22

@Jeffian,

Marstons the one to turn it around though? Well run business.Am a big fan. Not currently invested,but looking for a return.

[jeffian] 18/5/2017 15:21

I'm not that impressed. The reason Charles Wells split the brewery from the pubs is that brewing is a declining business and gets tougher all the time. Such growth as there is in the market comes from the micro-breweries and upstarts like Brewdog and Freedom. Just look at the names they are brewing for on licence (including Youngs) and ask yourself why they wouldn't brew for themselves. Quite. Marstons already own some of the best brands in the business. Adding more is simply likely to cannibalise sales from one brand to another. It smacks of a 'vanity purchase' to me. I still hold them (since Wolverhampton & Dudley days) for the yield and the security of the asset-backing provided by the estate, but they've always been a low-growth company and I can't see that this sort of purchase will do anything to change that.

[speedsgh] 18/5/2017 15:09

137p to buy in open market now so (excluding your trading costs) you can get them at same price as the Placing, if you are so inclined.

[rmillaree] 18/5/2017 14:34

Acquisition seems ok other than the freebies "money for the boys "6.8% discount" with a Market cap of 788 Mill surely they should need to do that - giving that % as free money to anyone is a poor waste of shareholders funds. I would rather have had some extra debt (not that i particularly want extra debt.

I guess they would say the cost a rights issue is more but at least us shareholders would have joined in the discount freebie.

can't help the shareprice either advertising the fact that freebie boys wouldn't pay the full price like the rest of us :)

Hey Ho

apologies if there was some sort of route for current shareholder to take freebie wise that i missed.

[colonel a] 18/5/2017 13:46

Expenses, £3 million.
Is capitalism not wonderful.

Although somewhat unusual that they have spelled out how much this has cost.
Perhaps they feel it is a tad excessive ??

[poolies3] 18/5/2017 13:31

This a class well run company
Hobgoblin and now Bombardier
What more can you want?

[bigboots] 18/5/2017 12:57

Love this acquisition

Well run company Charles Wells, very string brands and a great brewing business

Earnings accretive going forward

[speedsgh] 18/5/2017 12:09

Placing completed at 137p...

Results of Placing -

A total of 57,600,995 new ordinary shares of 7.375 pence each (the "Placing Shares") have been placed by J.P. Morgan Securities PLC, which conducts its UK investment banking activities as J.P. Morgan Cazenove ("J.P. Morgan Cazenove") and Numis Securities Limited ("Numis") at a price of 137.0 pence per Placing Share (the "Placing Price"), raising proceeds of approximately £78.9 million (before expenses). The Placing Shares being issued represent approximately 9.9% of the issued ordinary share capital of the Company (excluding treasury shares) prior to the Placing.

The Placing Price represents a discount of 4.9 per cent. to the closing price on 17 May 2017 and a discount of 3.1 per cent. to the intra-day price at 9.31 a.m. (being the time the Placing Price was agreed). The net placing price of approximately 131.7 pence per Placing Share to be received by the Company after expenses directly attributable to the Placing represents a discount of approximately 6.8 per cent. to that intra-day price.

[trytotakeiteasy] 18/5/2017 11:22

Marston's should of had lower debt and been able to do this without issuing equity. They have pursued the wrong strategy by not seeking reduce the debt burden in my view.

[speedsgh] 18/5/2017 11:18

@timbo - AFAIAA Charles Wells' 200+ pub estate was not up for sale (I know someone who works for CW). I also believe that CW's 'leading brands' & others (distribution rights/brewed under licence) mentioned in the rns today which are being acquired by Marstons have been struggling for a while. AIMHO DYOR.

[dogwalker] 18/5/2017 09:21

That's the spirit (geddit?) Lord Gnome.

[skinny] 18/5/2017 09:04

Shore Capital Buy 140.90 - - Retains

Peel Hunt Add 140.90 160.00 160.00 Reiterates