Carlsberg UK and Marston’s PLC have today announced in a press release to combine their both businesses and form a new, joint venture beer company, Carlsberg Marston’s Brewing Companyworth about GBP 780 million (USD 950m). The new company in which Carlsberg will hold 60% and Marston’s the remaining 40% will unite two of the leading brewing groups in the UK with a huge portfolio of international, national and regional brands.
Carlsberg UK brews and sells international brands like Carlsberg Danish Pilsner, Carlsberg Expørt, Poretti, Tetley’s, Somersby cider and the London Fields Brewery craft portfolio, brewed in Hackney, London. It also holds the brand licences in the UK for San Miguel, Mahou and the Brooklyn Brewery craft beer portfolio.
Marston’s is a leading pub operator and has an estate of around 1,400 pubs situated nationally, comprising managed, franchised and leased pubs. In addition it is an independent brewer of cask and packaged ales, including Hobgoblin, Wainwright, Marston’s Pedigree and 61 Deep. Marston’s also operate a number of brands under license and distribution agreements with global brand owners such as Estrella Damm, Shipyard, Erdinger, Warsteiner and Kirin.
Carlsberg Marston’s Brewing Company will have assets including Carlsberg UK’s Northampton brewery, London Fields brewery, and national distribution centre; and Marston’s six national and regional breweries – Marston’s, Banks’s, Wychwood, Jennings, Ringwood and Eagle – and 11 distribution depots.
Under the terms of the transaction, Carlsberg Marston’s Brewing Company will also have access to Marston’s pub estate for its beer portfolio which is enshrined through a strategic, long-term supply and distribution agreement.
Carlsberg has experienced strong headwinds in the UK in the last years. Carlsberg’s CEO Cees t’Hart named the UK last year as the market where the company is probably most disappointed in its performance. Total volumes of all Carlsberg beers declined in 2018 by 3% in a slightly growing beer market.
"At Carlsberg UK, we lost our way. We focused on brewing quantity, not quality; we became one of the cheapest, not the best. In order to live up to our promise of being ‘probably the best beer in the world’, we had to start again," said Carlsberg UK's VP marketing, Liam Newton last year, when the Danish brewer relaunched its flagship brand in the United Kingdom (inside.beer, 16.4.2019).
To make things worse, uncertainties concerning Britain leaving the European Union (Brexit) and the implications of the coronavirus shutdown which affect especially on-trade sales are currently shaking the UK beer market.Last week, Marston's secured a GBP 70 million (USD 85m) short-term loan to help it through the pandemic, which has forced its pubs to shut.
Carlsberg UK employees around 700 people based in Northampton and Leeds while Marston’s has around 14,000 people.
Current Carlsberg UK Managing Director, Tomasz Blawat, will be appointed CEO of Carlsberg Marston’s Brewing Company, with current Marston’s PLC CEO, Ralph Findlay, appointed as Non-Executive Chairman; and Richard Westwood, current Managing Director of Marston’s Beer Company, appointed as Chief Operating Officer, Integration.
Blawat commented: “We are excited to move into the next phase of our growth strategy. After a successful relaunch of Carlsberg Danish Pilsner in the UK last year, we are now building a new beer company by combining two organisations with shared values and strong history and heritage in brewing.
“Our intent for Carlsberg Marston’s Brewing Company is for it to become a platform for growth for all of our customers and suppliers, offering a bigger beer portfolio of complementary international, national and regional brands. We believe the new business will deliver even more value for employees, customers and consumers, thereby creating greater future growth potential.”
Findlay added: “This new partnership acknowledges Marston’s strategy, position and consistent outperformance against the UK beer market, realising value for shareholders today, whilst retaining an interest in the future upside of the combined entity.
“Marston’s strong heritage, extensive distribution platform and established reputation for brewing and logistics excellence, together with Carlsberg UK’s global brand portfolio and scale, combine the best attributes of both to create a compelling beer business with an outstanding portfolio of global and local beer brands, proven brewing expertise, strong distribution network and wholesale opportunity.”
The proposed joint venture is subject amongst other things, to Marston’s PLC shareholder approval and competition clearance and will include a consultation process for all Marston’s Beer Company employees in relation to the transfer of their employment. Both firms said talks over the move started towards the end of 2019 and it is anticipated that the transaction will complete in the third quarter of 2020. Until these processes are completed, it will remain business as usual for both companies.
The announced deal is the latest to be seen in a wave of consolidation across the sector.
Last year Fuller, Smith & Turner (Fuller's), a regional, family-run 300,000 hl brewery, founded in 1845 in Chiswick, West London, England, announced to sell its entire beer business to Asahi Europe, a wholly owned subsidiary of Asahi Group Holdings for an enterprise value of GBP 250 million (USD327m) on a debt free, cash free basis (inside.beer, 5.2.2019).
Last August, Greene King, one of UK’s leading pub retailers and brewers, had been also sold for GBP 2.7 billion (USD 3.3bn) to Hong Kong-based and Cayman Islands-incorporated CK Asset Holdings.Greene King is a 220-year-old pub and beer company which operates 2,700 pubs, restaurants and hotels and operates the Greene King Brewery in Bury St Edmunds and the Belhaven Brewery in Dunbar/Scotland (inside.beer, 20.08.2019).