Marston’s (MARS.L) has announced that it will take over the operation of 156 Brains pubs in Wales, saving 1,300 jobs.
The pub chain is to operate 141 pubs under the Brains brand with a further 15 short-leasehold sites to be operated under management contract for two years.
Marston’s will operate the 141 freehold pubs on a leasehold basis from February 2021 with an annual rent of £5.5m ($7.3m) charged from April 2021.
The company estimated that the deal will result in a rise in costs of up to £2m to operate the additional pubs, as the 1,300 employees transfer to Marston’s.
The move comes as “a consequence of the challenges of COVID, and in particular the recently announced more stringent additional trading restrictions in Wales” which has put Brains under “significant financial pressure,” the company said.
The takeover will allow Brains to “preserve the freehold capital value for its stakeholders, protecting Brains strong, heritage brand name and, importantly, safeguarding the jobs of the pub teams within the business.”
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Brains is a Welsh family business, established in Cardiff in 1882, with a portfolio of 156 pubs, mainly in South and West Wales. The company also owns the Brains heritage beer brand of Wales.
Marston’s currently has 106 pubs in Wales.
The company said the “transaction does not impact Marston’s financial strategy to reduce borrowings to below £1bn by financial year 2024.”
Ralph Findlay, chief executive of Marston’s, said: “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 over the 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.”
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