McEwan’s owner Charles Wells Ltd has agreed to sell its brewer and brand sales interests to Marston’s PLC for £55 million. The company will hang onto its pub assets but all its beer brands, as well as its wine merchants, Cockburn & Campbell, will move to Marston’s. The company bought McEwan’s and Youngers from Heineken in 2011, and although it continued to brew McEwan’s at the Caledonian Brewery for a number of years, more recently McEwan’s has also been brewed at its Bedford brewery alongside Charles Wells other ale brands Bombardier and Courage. And only recently Charles Wells pulled the plug on McEwan’s IPA. The deal also includes Charles Wells UK distribution rights for Kirin Lager, Estrella Damm, Erdinger and Founders in the UK, and the exclusive global license for the Young’s brand. Charlie Wells and John Bull beers will remain with Charles Wells, but employees at the brewery in production, national sales, and brands marketing will now transfer to Marston’s.
Now Charles Wells key focus will become the expansion of its managed pub businesses in the UK and France through acquisitions, alongside additional investment in the leased and tenanted estate. It does plan however to invest in a new , but smaller, Bedford based, brewery to supply beers to its pub customers in the UK and Europe, and brewing and supply agreements will be made with Marston’s for interim brewing and longer term exclusive pub distribution services. The Charles Wells pub estate will have the benefit of the wider beer and wine range available from Marston’s.
Justin Phillimore, Chief Executive of Charles Wells Ltd, commented, “We are delighted to have reached an agreement with Marston’s to acquire our brewery and become a close trading partner. After a detailed review of our strategy we had decided to re-balance the company more towards retail investment and that meant finding a partner we could work with for the future. There are opportunities for both companies in this deal and we look forward to bringing them to life”
Ralph Findlay, Chief Executive Officer of Marston’s PLC, commented, “Marston’s is delighted to have reached this agreement with Charles Wells and is absolutely committed to the future of brewing in Bedford. This agreement offers us opportunities to extend our trading area into new areas. The acquisition of the Charles Wells brewing business builds on Marston’s established brewing prowess and is a further step in our objective to develop the leading premium beer business in the UK market, something that Bedford’s Eagle Brewery will play an important part in.”
Jonathan Buxton, partner and head of consumer and retail at Cavendish Corporate Finance, said:
“This is a significant acquisitions for Marston’s as they seek to expand their trading areas and to become the leading premium beer producer in the UK market, displaying a positive outlook for this market.
“Acquiring Charles Wells’ brewing business for £55m on a 9x EBITDA may appear expensive, but after expected synergies of £4m by 2019 and the return on investment expected to reach 18% in three years, this deal should prove very favourable for Marston’s.
“At the same time, the transaction frees up Charles Wells to focus on its retail operations and it will be interesting to watch their continued expansion in the managed pub businesses in the UK and France. Despite mounting pressures on the sector from business rate hikes, the falling pound leading to higher food costs and the uncertainty around the General Election and Brexit, Brits are continuing to spend time and money in local pubs, so it is likely that we will continue to see more acquisitions in the sector.”