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Government looking to fast track the opening of pubs
Tim Worstall on Seeking Alpha
This looks a good one to put away for the medium term.
I think the deal was not greatly, if at all, altered by covid and it was a deal thought of as a good one for both parties going forward. I don't know what synergies the CMBC will come up with but you can bet Carlsberg will be pretty good at running things well where they can. Probably good software and staffing input and fleet controls not to mention maximising the retail outlet that both already have with fresh beverage sales by cross selling their existing outlets. Possibility of the continental Carlberg business taking former Marston stable brewer's output to widen sales to the continent . I am not a pub goer myself but hope Marston's do own some quality locations and get down to business after lockdown is lifted, there is probably a lot that can be done by a building refurbishment division of the business. Wetherspoons have it well developed.
Where are you putting your money for a post lockdown profit?
doze incorrect the deal was struck in May, negotiations commenced pre-covid. The issues/pressures already identified no doubt hastened agreement.
What brewing synergies that have not been mentioned, do you anticipate will materialise?
barchild-the deal was struck pre covid as a good way forward. The old set up had directors managing pubs and brewing. I expect the brewing to gain synergies and the freeholds a new management who can concentrate on service to the customer like Wetherspoons does.
You have certainly summed the position up nicely here, one other point to reinforce your thinking, if Mars were not in a horrible position post covid with no pubs open & only selling to the off trade/supermarkets on razor thin margins compared to pub sales, why would RF & the board accept an offer just for the brewery ?
To me it indicates that they knew they were drinking in the last chance saloon, they had no choice or a bad choice, obviously they had to accept the bad choice.
To be clear Marstons will have a share in a NEW brewing Company, CMBC, and will receive £273m for what?
What does that payment from Carlsberg represent? Can those who believe MARS will still have control over brewing please explain? Have yet to see a Junior Partner in a JV dictate to the Major holder......Carlsberg WILL call the shots.
Think of this, for a few more Million Carlsberg could take Marstons over but maybe find the Pub and Motel Estate unattractive.
Even though Whitbread, generally regarded as a pioneer in competitive Pub/Motels are raising, through a Rights issue, £1billion. This follows the windfall of £2bilion from Pepsi, 2 years ago,. WTB's balance sheet has no where near proportionate debt level of Marstons.
Darkarches there is nothing on the LSE financial diary for next week, where have you obtained the information?
Where did u get that info.? And what do people think on the potential results?
And let’s not forget, now Marston’s are largely out of brewing, being a part of “the largest brewing company in the U.K” now actually means very little, unfortunately, there are no major breweries left...
Yes, a junior partner, far from the 100% owner, and a major strategic shift.
Half-yearly earnings report for Marston's comes out Wednesday next week (10 June).
CMBC will obviously have its own separate management.
you are all over the place.
Lets be clear. Marstons will still be involved in brewing, as the 40% owner of the largest brewing operation in the UK , so your ''now that Marston’s have got out of brewing'' is nonsense.
Doze, Yes you are right, but it’s a big cultural shift, they are now “junior” partners in the brewing side. My point is they now have a tenanted and leased business, which for them is now a side show ( and ready for sell off), and a managed business which though largely freehold (as you say) is also mortgaged to the hilt...and they are not the best managed operators! The brewing side were the jewels, what is left is lacklustre...but they are not the worst. Now they are a pub property company, look at Ei, GK, Punch, if you want see what’s next...
Hoolicat; Marston's are not out of brewing they are trying out a better managing system out of which they can wriggle if it goes wrong. I think as a mainly freehold business Marston's will come out of lockdown much better than businesses that have leases to pay.
Also FD I have seen over the last year that you have been a genuine contributor, unlike some guesswork contributors who think, for example, that dividends will be back up next week! Debt will continue to be the critical factor here, despite the cash back from the brewery sale...and that still has to get voted in and get though MMC, which is likely but not a given.
The analogy is that Marston’s have successfully got into a lifeboat...and short term it is a great opportunity, (but then so are MAB, JDW, WTB over then next 3 weeks) but there are better long term pub ships to sale on now that Marston’s have got out of brewing. I have invested in MARS for a long while and I have strong connections with this company, the move out of brewing is a seismic shift which still needs evaluating over the coming months!
I expect the managed pubs to improve their offering when managers do not have the brewing to manage aswell. Return from the JV - 90% of free cash flow to be distributed so 36% to Marston's should be very good with synergies and wider market from combining outlets. Unless something derails the JV they have 10 years of implementation before revisiting strategy: IPO or carry on as normal.
Hoolicat glad you said that not me as I would be considered negative. Have tried to point readers in the right direction.However good the deal with Carlsberg, and there are short term gains, ultimately once the Major shareholder has brought in efficiencies, which may take 2 years, the autonomy of the unique and individual breweries will be centralised. This in itself will achieve significant savings, human resource reductions, distributions savings etc
The creation of CMBS as a private company leads me to think, it will be floated at the appropriate time.
Traditionally Marston’s have been a brewer with pubs, it has had three key revenues, it’s breweries/free trade, managed pub income and tenanted/lease pubs with rent and tied margin. It has been a source of pride in that it has acquired and kept intact several breweries, such as Ringwood and Jennings, But this income stream has only been 20% or so of income. Marston’s effectively selling it’s brewery is a fundamental change of its traditional character, though not necessarily a huge profit impact. So the sale represents a huge shift in culture... do not under estimate how much of a Culture shock this will be to employees and it represents a “nothing is off the table” change going forwards. So what is left is tenanted and leased pubs, about £30 million a year in profit...currently under severe pressure, with an average of 11% ROC on NBV of property...(pre-Covid) and could well be on the table for a sale to Admiral or New River. Them Marston’s would be down to just its Managed house/New build Managed house division. In this market it is woefully out matched...either in the value cheap dining market where there are far better offers, or the quality beer/dining market where it again is it out-gunned by independent offers. In the short term Marston’s is a great opportunity for a quick 70p to £1 run as pubs open, but medium term the company is going to get broken apart...the brewery sale represents the death bell within the next year..IMO and do your own research!
resemblance of creditably for the recent influx of Gob****es on this board must go to the post from nathm @ 11:28 today:
"Where do you see the share price moving to Claire?
My personal opinion is £1 when the government officially announce pubs are re-opening, but with a low mcap still this could be north of £1.50 in 3-4 months."
As my grandfather used to say " 2 pints of pi$s in a pint pot"
as mike down the road says "go big or go home!", now he might have been talking about his boyfriend or that guy he has his eye on; either way hes right, know what you are investing in what potential there is and when to get out, or keep liquid and cash in hand ready.
can see big things for this, and expect the big institutions and funds to pile in as alcohol and pubs sales will be far higher than shops, and with holidays abroad on hold or limited then having a beer or wine in the pub garden will be the best plan for most of UK even if its in a different town.
Have a great weekend all, and get ready for the ride to the moon. (yes i will invest in space X if that ever goes to market)
Trade Time Price Quantity Bid Offer Buy / Sell* Deal Value Trade Type
Jun 5 2020, 16:35 69.60 1,754,418 69.55 69.60 Buy £1,221,074.928 UT
If the JV goes to plan in the next few years I can see it being floated off, with the Mars. SP moving north big time.