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Marston’s Share Price Plummets 16% After Private Equity Firm Withdraws Offer

Simon Mugo trader
Updated 11 Feb 2021

Practice Stock Trading
Martson's

Shares of British pub operator Marston's PLC (LON: MARS) plummeted 16% after private equity firm Platinum Equity Advisors said it would not make a firm offer for the pub chain after Marston’s board rejected their initial acquisition proposal at 105p a share.

The pub operator confirmed the move after its board announced that it had rejected the PE company’s offer because it significantly undervalues Marston’s business. The offer price was 19% below the pub chain’s stock price in January 2020 before the coronavirus pandemic struck.

Marston’s is one of the few British pub chains that has survived the coronavirus pandemic lockdown measures better than its peers given that many of its pubs are located in suburban areas and remained partially operational.

The pub chain recently completed a deal to take over 156 pubs located in Wales from struggling pub operator Brains’ demonstrating its strong financial position despite the negative impact of the coronavirus restrictions on its business.

Marston’s stock surged last week after the company’s board rejected the offer, but fell today as the private equity firm said it would not make another offer for the pub chain.

The company’s board reassured investors that its business was on solid footing after the recent completion of the Brains’ transaction, but did not reveal how much money it intends to pour into the struggling Welsh pub chain.

Marston’s board also confirmed that it has adequate cash to ride out the latest coronavirus lockdown measures. Its joint venture with Carlsberg had strengthened its balance sheet boosting its financial position.

Marston’s share price.

Tradingview chart of Marstons share price 11-02-2021

Marston’s shares plunged 16.05% to trade at 83.4p having fallen from Wednesday’s closing price of 99.35p.

Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading