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Fuller Smith & Turner (FSTA)

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Down 896.00p
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Peel Hunt ups Fuller's to 'buy' after beer business sale

25 Jan 19

LONDON (ShareCast) - (Sharecast News) - Peel Hunt upgraded its recommendation on Fuller, Smith & Turner on Friday and lifted the price target to 1,250p from 1,150p after the company agreed to sell its entire 200-year old brewery business to Japan's Asahi for an enterprise value of 250m.
"For Fuller's, the result is clear: this transformative deal provides the foundation for many years of strong growth, hence we are moving our recommendation from 'add' to 'buy'."

The broker said the price, which represents 23.6x EBITDA, is a good transaction. "It had to be; the company was not going to undertake it lightly."

Peel said it has adjusted its forecasts, expecting this transaction initially to dilute FY profits by circa 10% from May. However, after returning 55-69m to shareholders, it expects net debt/EBITDA to drop below 1x, a position from which the pub estate should be able to grow rapidly.

"As the company has a small amount of expensive debentures, lower debt could increase the cost of debt in the short term, but this is not a concern. The company is likely to become more acquisitive, but without compromising on its disciplined acquisition criteria," the broker said.

Fuller's said earlier that it would net about 205m in cash from the sale.

At 1435 GMT, the shares were up 15.5% to 1,050p.

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 896.00p
Change Today -10.00p
52 Week High 1,230.00p
52 Week Low 890.00p
Volume 3,712
Shares Issued 32.37m
Market Cap 290.03m


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