Fuller Smith & Turner PLC (LON:FSTA) is to become a pure-play pubs and hotel operator after agreeing to sell off its beer business to Japan’s Asahi for £250mln.
The London-based brewer currently owns the London Pride, Frontier and Cornish Orchards brands but said their disposal would allow it to focus on its pub and hotels, which now generate almost 90% of its profits.
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It will reinvest some of the cash proceeds – expected to be around £205mln – into this side of the business, while bosses also plan to return between £55-69mln to shareholders.
Under a long-term supply agreement between the two, Asahi will remain a key supplier to Fuller’s pubs.
“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,” said chief executive Simon Emeny.
“Asahi, as a company recognised for brewing excellence, is an appropriate custodian of our rich brewing history and the Griffin Brewery, and will ensure the Fuller’s Beer Business brands will reach an even wider global audience.”
Strong Christmas performance
Alongside news of the sale, Fuller’s said it had enjoyed a “very strong” performance over the key Christmas period, with like-for-like sales in its pubs and hotels division up 5.6% over the past ten weeks.
For the 42 weeks of its financial year so far, like-for-like sales in the pubs and hotel business are up 4.7%, while like-for-like-profits in its Tenanted Inns division have risen 2%. Beer and cider volumes are flat.
“This is a very good set of figures and I’m particularly pleased with the way our Managed Pubs and Hotels performed over the important five-week Christmas and New Year trading period,” said Emeny, who also noted the “uncertain and challenging” consumer environment.
Fuller’s shares surged by 26% to 1,144p.