Midlands brewers pay pounds 7.5m for Mercury stake

Two Midlands brewers are paying pounds 7.5m for a two-thirds stake in Mercury Taverns, a group formed specially to buy 111 pubs from Bass in 1993, writes Magnus Grimond. The price being received by NatWest Ventures and Murray Johnstone values Mercury at pounds 11.4m, which compares with the pounds 23m that the Mercury management, backed by the venture capitalists, paid for the original business in 1993. Mercury is understood to remain highly geared.

The latest transaction, which will leave management with one- third of Mercury's equity, involves the formation of a 50:50 joint venture between Burton-on-Trent-based Marston, Thompson & Evershed and Wolverhampton & Dudley breweries. The two brewers will take on the beer supply agreements for Mercury, dividing up the 129 tenanted pubs and 31 managed houses roughly equally between them. The estate is predominantly in the Midlands, but Marston will take on Mercury's East Anglian pubs, while Wolves & Dudley will supply South Wales, the North-east and London.

The business is expected to add around 5 per cent to Marston's volumes and around half that to the throughput at Wolves & Dudley. Supply agreements with Bass, Carlsberg Tetley and Scottish Courage will be terminated over the next few months.

Mercury made profits of pounds 1.3m in the year to September, at which date net assets were valued at pounds 13.3m.