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27 May 2020 | 08:13

Liberum bumps up Marston's price target on Carlsberg JV

(Sharecast News) - Broker Liberum upped its price target on buy-rated Marston's to 90p from 65p on Wednesday as it argued that the creation of a brewing joint venture with Carlsberg, announced last week, "solves several near-term issues and should continue to drive value over the medium to long term". Liberum said the JV crystalises value, simplifies the business focused on higher growth/higher returns pubs and releases cash to pay down debt.

"The transaction structure should initially be cash flow neutral and earnings enhancing over the longer term as synergies are realised in both the JV and retained Marston's business," it said. "We continue to expect securitised bondholders to approve covenant waivers and amendments imminently, unlocking liquidity headroom and improving sentiment."

Marston's announced last Thursday that it had formed a new joint venture partnership with Carlsberg UK to create a "best-in-class, brand-led UK brewer of scale" worth around £780m.

Under the terms of the agreement, Marston's will receive a 40% stake in Carlsberg Marston's Brewing Company, and a cash equalisation payment of up to £273m. Marston's said it will focus on its pub and accommodation business while retaining its stake in "a larger, more attractive brewing business".
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