UK brewer and pubs group Marston's attracts U.S. private equity approach

(Reuters) – Pub group Marston’s, brewer of Pedigree, Hobgoblin and Lancaster Bomber beer, has caught the eye of U.S. Platinum Equity Advisors which is looking to make a cash offer for the two-century-old firm, the British company said on Friday.

Shares in Marston’s jumped 16.9% to 87.7 pence by 1357 GMT after news of the unsolicited non-binding approach. The firm was valued at about 473 million pounds ($649 million) at closing prices on Thursday, according to Refinitiv Eikon data.

The pubs sector has been in decline for many years and most recently has been hit by forced closures to contain the spread of the new coronavirus, along with restaurants and other leisure businesses. The company’s shares fell 40.6% in 2020.

Marston’s, which runs around 1,400 pubs, said it would evaluate the unsolicited proposal with its advisers.

Last year it revealed plans to cut around 2,150 jobs and called for more government support as it posted an annual loss.

It could become the latest British pub operator to be taken private, after Greene King agreed to a 4.6 billion pound takeover from Hong Kong’s CK Asset in 2019 and Ei Group was bought by Slug and Lettuce owner Stonegate owner last year.

Stifel analyst Mark Irvine-Fortescue said Marston’s was trading at a “modest” 14% discount to its net asset value but if the once family-owned firm was taken private it would face less pressure to reduce debt and resume dividend payments.

“This news should serve to highlight the attractions of the sector, and underpin valuations during the COVID recovery phase,” the analyst said.

Bloomberg first reported bloom.bg/2MyjrSv the potential deal earlier on Friday and said the proposal includes taking the company private, citing people with knowledge of the matter.

The U.S. private equity firm did not immediately respond to a Reuters request for comment.

“We see positive implications across the sector, especially for M&B (Mitchells & Butlers),” Jefferies analysts said, referring to another potential bid target and picking out M&B as particularly undervalued.

Shares in rival J D Wetherspoon were up 1.3%, while M&B rose 2.4% around.

Under stock market rules, Platinum now has until close of play Feb. 26, to make a formal offer.

($1 = 0.73 pounds)

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