Pub operator Marston’s has today announced a deal with Welsh brewer Brains to operate its portfolio of 156 pubs in Wales, on a combination of leased and management contract arrangements.
Established in Cardiff in 1882, Brains is one of Wales’ best known family businesses and owns a portfolio of 156 pubs, principally located in South and West Wales, as well as brewing an iconic range of beers, however like many hospitality businesses, Brains has experienced significant financial pressures due to COVID 19 and particularly the new alcohol restrictions on trading in Wales, which has seen Brains close over 100 pubs due to the ban.
Today’s agreement has the unanimous support of the Brains’ Board and its lenders, is consistent with Marston’s long-term strategy as a focused pub operator, post the recent disposal of its brewing assets, and strengthens the Group’s representation in South and West Wales.
Marston’s already has 106 pubs in Wales and has undertaken significant investment in newbuild pubs over the last 10 years. Going forwards, Marston’s will operate the 141 freehold pubs on a leasehold basis, with effect from February 2021, with rent chargeable from April 2021. The majority of these will be on long lease agreements of 25 years. The outlet level EBITDA on a pre-COVID basis is £14 million and annual rent of £5.5 million will be charged from April 2021. In addition, Marston’s will operate the 15 short-leasehold sites on a management contract basis for a period of two years, and the c.1300 employees will transfer to Marstons.
Ralph Findlay, Chief Executive of Marston’s, commented:
“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.
“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 overthe weeks and months ahead.”
John Rhys, Chairman of Brains, said
“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. 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.”