When the joint venture between Marstons and Carlsberg UK was announced on 22nd May the reaction in the financial pages was muted. There was no criticism but little comment.
Capitalism has other things to ponder just now but rest assured (or not) market capitalism is churning relentlessly on.
The Times has now publshed an update on the first week of trading after the announcement and concluded it looks positive- for business that is, not drinkers particulary. We are not really at the table here.
The Times is of course paywalled but a flavour of the piece is below.
The advice is ‘buy’. One hopes that this will also be the case in future with at least some of the range of cask beers which Marstons breweries produced and which will now be brewed by Carlsberg UK
Investors and analysts have been toasting Marston’s deal with Carlsberg. Shares in the FTSE 250 pubs and brewery group doubled in price on the day the agreement was made public at the end of last week, and have lost little of their fizz over the subsequent days. The follow-ups from the analysts that cover the stock have been overwhelmingly enthusiastic.
It’s not difficult to see why. While the partnership dims Marston’s involvement in brewing ales and beers, and sparked howls of outrage from the ale purists, it has teamed up with a well-regarded player and the terms value its existing operations at a sound multiple of earnings.
The £273 million cash payment Marston’s receives means that it can meet its target of cutting its unsustainable £1.4 billion of debts by £200 million, and early. That the group’s called time on dividend payments this year has been forgiven in the light of the current crisis……
ADVICE Buy
WHY Strong joint venture with prospects, debts becoming manageable and the shares are very cheap
Details of the Joint Venture
After Fullers & Greene King, Marstons set to lose independence with joint venture
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