British pub operator Marston's has said that it will combine its brewing business with Carlsberg UK into a joint venture for a 40% stake and a cash payment of up to £273 million.
Marston's, which has had to shut all of its pubs due to the coronavirus crisis, said that the partnership values its brewing business at up to £580 million and Carlsberg UK's brewing business at £200 million.
Cost Savings
Carlsberg Marston's Brewing Company, the joint venture, will deliver annual cost savings of approximately £24 million, expected by the end of the third year following the completion of the deal, Marston's said.
The new company will get both Marston's and Carlsberg UK's breweries and distribution centres in the UK.
Debt
Marston's, the two-century old brewer of Pedigree, Hobgoblin and Lancaster Bomber beers, has also been looking to sell pubs to cut debt and recently raised the target from such disposals to £85 million-£90 million.
Marston's net debt stood at £1.4 billion at the end of fiscal year 2019.
The company said that the venture, talks for which began late last year, will materially reduce debt and provide additional financial flexibility, and also allow it to focus on its pub and accommodation businesses.
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