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Fuller Smith & Turner (FSTA)

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Fuller's sells beer business to Japan's Asahi

25 Jan 19

LONDON (ShareCast) - (Sharecast News) - London Pride is turning Japanese, as Fuller, Smith & Turner surprisingly decided to flog its entire 200-year old brewery business to Japan's Asahi.
Fuller's has agreed to sell the beer business for an enterprise value of 250m, netting the company about about 205m in cash in return for such beloved British brands as London Pride, Dark Star ales and Cornish Orchards ciders, plus the Griffin Brewery that has been rolling out barrels in Chiswick since 1816.

The two companies have agreed a strategic alliance, including a long-term supply agreement where Asahi Europoe will act as a key supplier to Fuller's pubs and hotels business.

Directors of the London-listed company expect to return of between 55m and 69m, or 100-125p per share, of the net cash proceeds to shareholders, with a portion used to make a contribution to the pension scheme and the remaining funds used to develop the ongoing pubs and hotels business.

The sale is, however, dependent on approval by shareholders, with details of an extraordinary general meeting to be confirmed soon and if approved, the deal is expected to complete in the first half of the year.

The price represents a multiple of 23.6 times adjusted operating profits, which were 10.6m in the last set of full year results.

A trading update also revealed trading remained strong with managed like-for-like sales of 5.6% over the past 10 weeks and 4.7% over the 42 weeks to 19 January, while LFL profits in tenanted inns were up 2.0%. Total beer and cider volumes have remained level.

Fuller's chief executive Simon Emeny said: "This deal secures the future of both parts of our business including protecting the heritage of the Griffin Brewery in Chiswick, which was particularly important to the Fuller's coard.

"We remain incredibly proud of the Fuller's Beer Business, its history and the high quality premium beer and cider portfolio that we have developed. Brewing has formed an integral part of our history and brand identity, however the core of Fuller's and the driver of our future growth is now our premium pubs and hotels business."

Shares in FST, having lost a quarter of their value over the past three years, were up 22% to 1,105p after just over an hour of trading on Friday. Reading across the sector led other brewers such as Marstons and Greene King to bubble higher too.

Analysts at Liberum said the deal was "unexpected but a welcome one - realising a significant value for shareholders and exiting a challenging beer market and leaving Fullers and a more focussed, premium, managed pub and accommodation business".

"Tokyo Pride?" wondered Neil Wilson at "Whilst losing an iconic brewer is maybe a blow to London pride, investors are raising a glass."

He noted that Fuller's will now focus on the pubs and hotels business that generated 87% of operating profits last year, with the cash proceeds enabling further investment.

"Punters won't notice much difference at the bar. Pubs may be closing at a hell of a clip these days but consumers still want experiences and dining out is one of those. Therefore investing in pubs and hotels is essential as consumers demand more from their pub experience."

Note 1: Prices and trades are provided by Digital Look Corporate Solutions and are delayed by at least 15 minutes.


Market Data

Currency UK Pounds
Price 902.00p
Change Today -4.00p
52 Week High 1,230.00p
52 Week Low 890.00p
Volume 3,244
Shares Issued 32.37m
Market Cap 291.97m


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