Marston agrees Nomura pub deal

MARSTON, the Burton brewer, yesterday brushed aside a possible merger approach from Wolverhampton & Dudley and signed a package deal with Nomura investment broking arm to securitise most of its tenanted pubs in return for pounds 135.3m cash.

At least pounds 60m will be returned to shareholders if they approve the deal at a meeting on 9 December. The balance will be invested in improving the rest of the Marston estate, including the brewery, 259 managed houses and its flagship Pitcher & Piano and Via Vita chains.

W&D is expected to challenge the deal, which gives Marston the exclusive right to continue supplying the pubs for only four years. Last week the City was expecting W&D to bid around 275p a share for Marston and the shares fell 17p to 226.5p yesterday.

The deal with Nomura will also create an exceptional profit of pounds 30m for Marston this year, and the 569 tenanted properties in the deal will revert after 28 years to a holding company in which Marston has a 51 per cent stake.

In the meantime the estate will be run by a management company. The profits from the tenancies (pounds 15.8m in the year to 28 March) will go to pay the interest on bonds issued to raise finance for the transaction.

The finance will come from about a dozen institutional investors that are putting up pounds 155m for a package of fixed-rate and floating-rate bonds. Almost pounds 20m will be swallowed up by fees, including pounds 5m in stamp duty and pounds 2.5m retained to invest in the pubs, plus legal costs and fees to Nomura and Lazards as financial advisers.