Marston’s (MARS) is calling time on 9 per cent of its pub estate, selling a raft of smaller sites as part of its latest efforts to reduce net debt by £200m over the next five years.
On Monday, the group said it had reached terms to dispose of 137 of its smaller, wet-led leased, tenanted and franchised pubs to Admiral Taverns, for £44.9m. Collectively, this “non-core” estate portfolio generated earnings before interest, tax, depreciation and amortisation of £4.8m in the 12 months to 28 September, and an operating profit of £3.7m.
To analysts at Numis, the disposal was made at an “attractive multiple”, though it has also been struck at a 28 per cent discount to book value. However, the broker said that the carrying value for Marston’s remaining leased and tenanted assets is “some way below the multiple on the disposal estate”, while the shares have traded below net asset value throughout 2019.
As well as the boost to the cash pile, management calculated that the disposal will lift the average profit per pub in the retained estate by “around seven per cent”, and boost the return on capital by 0.2 per cent.
