Marston’s takes on SA Brain’s 156-strong pub stable

As previously reported by The Morning Advertiser (MA)​, the Welsh brewer and pub operator had been put up for sale​ earlier this month after recruiting advisers to navigate a “period of uncertainty”. 

In light of stringent pandemic restrictions imposed across Wales, including pubs being told to close at 6pm and banned from serving alcohol from 4 December, a statement from the company said: “Given the impact of Covid-19 on the entire hospitality sector, Brains with its advisers Evercore, is working with all stakeholders to navigate through this period of uncertainty.”

However, the Wolverhampton-based operator of close to 1,400 pubs across the UK, Marston’s, has agreed to operate to operate 141 SA Brain & Co freehold pubs under the Brains brand and a further 15 leasehold sites under management contract.

The move – which was met with unanimous approval from Brains’ board and its lenders – will see 1,300 pub employees transferring to Marston’s safeguarding jobs.

Marston’s, which already operates 106 pubs in Wales, will operate Brain’s estate under existing branding and continue to offer its beers from February 2021, with annual rent of £5.5m to be charged from April 2021.

Consistent with strategy 

According to a statement from Marston’s, an initial incremental central overhead of up to £2m will be required to operate the additional pubs from which, outlet level earnings before interest, taxation, depreciation and amortisaiton (EBITDA) on a pre-Covid basis is £14m. 

What’s more, the deal does not impact Marston’s aim to reduce borrowings to below £1bn by financial year 2024. 

“We have worked closely with the management team and the SA Brain family to collaborate on a mutually beneficial transaction that safeguards the future of Wales’ leading pub company, enabling these great pubs to have a stable and successful future, and securing 1,300 hospitality jobs in Wales,” Ralph Findlay, Marston’s chief executive commented. 

“This transaction is entirely consistent with Marston’s long-term strategy as a focused pub operator and strengthens our representation in south and west Wales, whilst protecting the heritage and independence of an iconic Welsh business.  

“These high-quality pubs are a great fit with our existing estate and will benefit from Marston’s scale and operational expertise to further unlock their excellent long-term potential.   

"We look forward to the pub teams joining us and to welcoming guests and the communities which they serve, back into these pubs as the country emerges from the pandemic over the weeks and months ahead.” 

While Marston’s recently revealed it made a total loss of £397.1m​ during the year to 3 October 2020, it recently received £232m in proceeds from its joint venture with Carlsberg to create the Carlsberg Marston’s Brewing Company, following the deal’s completion in October​​. 

Preserving the business 

Established in Cardiff in 1882, Brains is an iconic family business, synonymous with pubs and brewing in Wales with which Marston’s has had a longstanding relationship according to the deal's announcement. 

“This agreement marks the formation of a lasting strategic relationship with Marston’s which secures the future of Brains’ pubs and 1,300 of our employees within them,” Brains chairman John Rhys said.

“We know and trust Marston’s to be excellent custodians of our pubs and, whilst this is not a decision we have taken lightly, we are confident that both our pubs – and our pubs teams – will thrive under their stewardship.  

“Furthermore, this transaction enables Brains to recapitalise its balance sheet and continue its long heritage as an independent entity, preserving this great Welsh business for generations to come.  

“We thank all our stakeholders and our advisers, Evercore, for their steadfast support which has enabled us to achieve this transaction in these unprecedented times.”