Marston’s buys Charles Wells brewery
Consolidation among the mid-tier UK brewers continues as the real ale producer Charles Wells is to sell off its Bedford brewery to Marston’s in a GBP 55 million (USD 70 million) deal. The transaction was reported on 18 May 2017.
Charles Wells’ Eagle brewery is home to the Bombardier, Courage and McEwan’s ale brands. The deal with Marston’s also includes UK distribution rights for Kirin Lager, Estrella Damm, Erdinger and Founders, as well as the exclusive global licence of the Young’s ale brand.
It does not include the chain of more than 200 Charles Wells pubs across the UK and France.
Charles Wells has been operating in Bedford since 1876, with the Eagle brewery built in 1976. Reportedly, it has a capacity to produce more than one million hl beer every year, although actual production would have been much lower with contract beers representing a sizeable amount.
Around 300 people employed in production, sales and marketing at Charles Wells will transfer to Marston’s.
Eventually, Charles Wells will build a new brewery. It will be much smaller, though, and just produce tax efficient volumes for their own estate.
Observers say that Charles Wells must have felt squeezed between the big national brewers (Heineken, Molson Coors, AB-InBev, Carlsberg) and the growing army of craft brewers and decided it was better to seek an exit.
Besides, Marston’s offer was too good to turn down. The deal multiple must have been high as, in the financial year ended 30 September 2016, Charles Wells Brewing and Beer Business generated revenues of GBP 92 million (USD 118 million), an EBITDA of GBP six million and an EBIT of GBP five million (USD 6.4 million). The contribution of the brewing arm would have been very small indeed.
As Charles Wells transforms itself into a pub company, Marston’s remains a vertically integrated brewer and pub operator. Apart from controlling 1,500 franchised pubs, Marston’s currently operates five breweries in Burton-on-Trent (Marston’s), Oxfordshire (Wychwood & Brakspear), Cumbria (Jennings), Hampshire (Ringwood) and the West Midlands (Banks’s).
In its past fiscal year (ended 1 October 2016), Marston’s saw revenues rise seven percent to GBP 905.8 million (USD 1.2 billion) while net income improved 213 percent to GBP 73 million (USD 93.5 million).
