APPENDIX I
MATERIAL CONTRACTS

1.                     The Group

1.1.                  Transaction Agreements

(A)        Share purchase agreement

Parties and structure

The Disposal is governed by the share purchase agreement ("Share Purchase Agreement") entered into between Marston's, Marston's Trading Limited ("MTL"), Carlsberg UK Holdings Limited ("CUKH"), Carlsberg Breweries A/S and CMBC (the "Parties"). Pursuant to the Share Purchase Agreement, subject to the Shareholder Approval Condition, MTL has agreed to sell and CUKH has agreed to purchase 64 ordinary shares of £1 each in the capital of CMBC (representing MTL's entire shareholding in CMBC, being 40% of the issued share capital of CMBC) (the "Sale Shares"). Following completion under the Share Purchase Agreement, CMBC will become a wholly owned subsidiary of CUKH.

Condition

As the Transaction constitutes a Class 1 transaction for Marston's under the current UK Listing Rules, completion of the sale and purchase of the Sale Shares pursuant to the terms of the Share Purchase Agreement is conditional on the Shareholder Approval Condition. The Transaction is not subject to any other conditions. If the Shareholder Approval Condition is not satisfied or waived before 15 December 2024 (being the "Long Stop Date"), then the Share Purchase Agreement shall terminate. Pursuant to the Share Purchase Agreement (and as further described in the above section "Sale of CMBC transaction summary"), the Shareholder Approval Condition may be waived by MTL at its sole discretion to take account of the fact that the UK Listing Rules are expected to change in the summer of 2024 in a manner that would mean the Shareholder Approval Condition is no longer required for a Class 1 transaction.

Waiver

In addition (also as further described in the above section "Sale of CMBC transaction summary"), Marston's has granted the Waiver to Carlsberg and CUKH pursuant to the Share Purchase Agreement in connection with the Carlsberg Transaction. The Waiver is limited to the Carlsberg Transaction only, and will immediately cease to have effect if the Carlsberg Transaction does not complete by 1 August 2025 or is completed for a total enterprise value of less than £1,000 million. The Waiver is not conditional on completion under the Share Purchase Agreement.

SHA

The Parties have agreed that the SHA will terminate subject to, and conditional upon, completion under the Share Purchase Agreement.

Consideration

The consideration payable by CUKH for the Sale Shares at completion is £206 million in cash (the "Consideration"). The Consideration is not subject to any value adjustment mechanism.

Warranties and Indemnities

MTL has given limited customary fundamental warranties relating to its title to the Sale Shares, each of which shall be repeated at completion of the Share Purchase Agreement. All Parties have also given customary limited fundamental warranties relating to capacity and solvency. 

CUKH has agreed to indemnify the Group for any losses suffered or incurred in respect of the Carlsberg UK Limited Pension Scheme (or any member of such scheme) for a period of six years from completion under the Share Purchase Agreement (the "Pensions Indemnity").

Guarantees

Marston's has agreed to guarantee all of MTL's obligations, commitments and undertakings arising under or in connection with the Share Purchase Agreement. In addition, Carlsberg Breweries A/S has agreed to guarantee all of CUKH's obligations, commitments and undertakings arising under or in connection with the Share Purchase Agreement (including the Pensions Indemnity).

Governing law and jurisdiction

The Share Purchase Agreement is governed by English law. The English courts will have exclusive jurisdiction to settle any dispute arising out of or in connection with the agreement.

(B)        Deed of Amendment in relation to the Supply Distribution Agreement

Parties and structure

CMBC and MTL entered into the SDA on the date of completion of the joint venture (30 October 2020) for a term of up to 20 years (as amended by a consumables termination notice entered into by CMBC and MTL on 24 June 2022). The SDA governs the terms for the supply and distribution by CMBC of drinks products and related services to MTL. It is intended that the SDA will remain in place on substantially the same terms subject to the key amendments set out below. In order to reflect the end of the joint venture between MTL and CUKH and the termination of the SHA, CMBC and MTL have agreed to amend the SDA pursuant to a deed of amendment (the "SDA Deed of Amendment"), that will be entered into and become effective at completion of the Share Purchase Agreement.  

The SDA Deed of Amendment provides for a non-material amendment to a customer KPI, and the inclusion in the SDA of certain termination rights that are otherwise included in the SHA (that will terminate on completion of the Share Purchase Agreement) to be granted to both parties to the SDA. In respect of termination following a change of control of either party, the other party can terminate the SDA provided that such rights must be exercised within six months of the relevant change of control taking place in order to be effective and termination will take effect within a set period of time after the relevant termination notice is served (such period of time to vary depending on the identity of the new controller). The SDA Deed of Amendment also provides for CMBC to have an immediate termination right under the SDA (in line with exit rights otherwise included in the SHA) if certain customer targets are not met by MTL within an agreed tolerance.

Following service of any such termination notices, (or following termination or expiry of the SDA in any other circumstance) CMBC is obliged to support MTL with the transition to an alternative logistics supplier.

1.2.                  Marston's Licence Agreement

Marston's and CMBC entered into the Marston's licence agreement on the date of completion of the joint venture (30 October 2020) (the "Marston's Licence Agreement"). The Marston's Licence Agreement ensures that CMBC perpetually licenses to Marston's (subject to some limited termination rights) certain intellectual property which was contributed to CMBC by the Group in connection with the original joint venture for the purposes set out below.

Under the Marston's Licence Agreement, CMBC licenses to Marston's on a royalty-free, worldwide basis: (i) certain word and device marks relating to the "Marston's" name, including the "Marston's" and "Marston's Brewery" trade marks and the "three barrels" device mark, for use in connection with the operation of a hospitality, telecommunications and/or property development business; and (ii) certain other trade marks contributed to CMBC, primarily the beer brands "Jennings" and "Banks's", for use in connection with the operation of a hospitality business.

This licence from CMBC to Marston's is exclusive in the fields set out at (i) and (ii) above, such that only the Group can use the licensed trade marks within those exclusive fields. Although the Group no longer exercises direct control over the "Marston's" name, CMBC is required, pursuant to the Marston's Licence Agreement, to maintain and prosecute the licensed marks (including "Marston's") at Marston's cost.

The Marston's Licence Agreement shall continue in full force and effect notwithstanding the Transaction.

1.3.                  Private Placement

In November 2019, the Company issued £40 million of privately placed debt (the "Private Placement") which sits pari passu with Marston's bank lending. There is a fixed rate of interest paid quarterly over the term of the Private Placement, with a bullet repayment on maturity. On 30 March 2023, Marston's successfully secured an amendment and extension to the Private Placement to the end of January 2025.

1.4.                  Banking facilities

Marston's has access to certain banking facilities. On 13 May 2024, Marston's successfully secured an amendment and extension to its existing banking facility, which was due to expire in January 2025. The revised £340 million of funding comprises a £300 million bank facility, maturing in July 2026, and an additional £40 million bank facility with a maturity of up to July 2026, drawings of which must be used to repay the Private Placement.

2.                     CMBC

Save for: (i) the Share Purchase Agreement; (ii) the SDA (as shall be amended by the SDA Deed of Amendment); and (iii) the Marston's Licence Agreement, each as more particularly described above, no contracts have been entered into (other than contracts entered into in the ordinary course of business) by CMBC, either: (i) within the two years immediately preceding the date of this announcement which are or may be material to CMBC; or (ii) at any time, which contain any provision under which CMBC has any obligation or entitlement which is or may be material to CMBC as at the date of this announcement.

APPENDIX II
RISK FACTORS

Shareholders of Marston's ("Shareholders") should carefully consider, together with all other information contained in this announcement, the specific factors and risks described below.

The Company considers these to be the known material risk factors relating to the Transaction for Shareholders to consider. There may be other risks of which the Board is not aware or which it believes to be immaterial which may, in the future, be connected to the Transaction and have a material and adverse effect on the business, financial condition, results of operations or future prospects of the Group.

The risks described below are only those which: (i) are material risk factors relating to the Transaction; (ii) will be material new risk factors to the Group as a result of the Transaction; or (iii) are existing material risk factors to the Group which will be impacted by the Transaction. Note that the risk factors are set out in order of materiality within each section.

1.         Material risk factors to the Transaction

1.1.      The Transaction not coming into effect

Pursuant to the Share Purchase Agreement, completion of the Transaction is conditional upon the Shareholder Approval Condition. The Shareholder Approval Condition may be waived by MTL acting in its sole discretion, to take account of the fact that the UK Listing Rules are expected to change in the summer of 2024 in a manner that would mean the Shareholder Approval Condition is no longer required for Class 1 transactions. If the UK Listing Rules are amended within an appropriately short time frame, the directors propose to waive the Shareholder Approval Condition. If the UK Listing Rules are not amended within an appropriately short time frame, the directors would seek shareholder approval for the Transaction.

There can be no assurance that the Shareholder Approval Condition will be satisfied or waived and accordingly, that completion will take place. If the Transaction does not complete in accordance with the terms of the Share Purchase Agreement, any of the risks and uncertainties set out in sections 1.2-1.3 of this Appendix II (Risk Factors) may adversely affect the Group's business and results.

1.2.      Inability to realise shareholder value

The Board believes that the Transaction is in the best interests of the Group and of its Shareholders as a whole, and that it currently provides the best opportunity to realise an attractive and certain value for Marston's interest in CMBC. If, therefore, the Shareholder Approval Condition is not satisfied or waived as applicable and the Transaction does not complete, the Company will not receive the cash proceeds from the disposal of its 40% interest in CMBC (the "Disposal") and will forgo the other anticipated benefits of the Transaction as described in this announcement. 

In particular, the Board intends to use the net proceeds of the Transaction to de-leverage, including paying down the Private Placement and banking facilities. Following these actions, Marston's expects that: (i) the Marston's Group's overall interest expense would reduce by c.£18 million vs. the Board's current expectations; and (ii) it would accelerate the attainment of its 2026 net debt target of <£1 billion. If the Shareholder Approval Condition is not satisfied or waived as applicable, the Transaction will not complete, and these benefits will not be realised, with Marston's remaining less financially flexible.

1.3.      Potentially disruptive effect on the Group and CMBC

If the Transaction does not come into effect, this may lead to management and employee distraction due to perceived uncertainty as regards the future of Marston's interest in CMBC, and the future of CMBC more generally. Both the Group and the Carlsberg group have committed significant time and resources to the Transaction. As a result, other business opportunities may have been missed or insufficiently executed which may not be rectifiable if the Transaction does not come into effect. In addition, the media could portray the non-completion of the Transaction as a strategic failure of the Group which could erode confidence among investors and stakeholders.

Further, in circumstances where Marston's has subsequently attempted to exit the joint venture unsuccessfully, investors and stakeholders might conclude that Marston's continued interest in CMBC is unsustainable. This uncertainty as to Marston's commitment to the joint venture and the future of its interest in CMBC (and CMBC more generally) might lead suppliers and customers of CMBC to feel it is not in their commercial interests to continue to do business with CMBC. This uncertainty might also lead to the departure of certain members of staff of CMBC or a drop in performance levels of such members of staff, which may have an effect on the ability of CMBC to adapt and innovate to meet future commercial challenges.

The failure to implement the Transaction may therefore have an adverse effect on the performance of CMBC and its value to the Group (including a likely impairment of its investment in CMBC), and may also adversely affect Marston's share price.

2.         Material new risk factors to the Group as a result of the Transaction

2.1.      Financial risks for the Group in relation to its exit from the joint venture alongside Carlsberg

The Marston's Group will forgo future returns from the joint venture, to the extent such returns were available and this may adversely affect the Group's business and its results. As set out in the above section "Key financial information of CMBC", underlying income received from CMBC was £9.9 million for the financial year ended 30 September 2023. Dividends received from CMBC totalled £21.6 million for the financial year ended 30 September 2023. The declaration and payment of any dividend is always dependent on the directors' assessment of the profits that the joint venture has available for distribution to its shareholders at the relevant time.

2.2.      The Group's operations will be less diversified and more susceptible to specific risks

Following the Transaction, the Group's business will be less diversified, and its overall financial performance will be dependent on the retained pub business alone. Risks impacting the pub sector more generally or specific issues arising in the retained pub and accommodation business will accordingly have a proportionately greater adverse impact on the financial condition of the Group, and have the potential to create a greater risk of share price volatility following the Transaction.

2.3.      Waiver of certain rights under the SHA

As further described in the above section "Sale of CMBC transaction summary", Marston's has granted the Waiver to Carlsberg and CUKH pursuant to the Share Purchase Agreement in connection with the Carlsberg Transaction. The Waiver is effective on signing of the Share Purchase Agreement and is not conditional on completion, and so even if the Transaction does not complete (because, for example, the Shareholder Approval Condition is not satisfied or waived), Carlsberg will still be permitted under the terms of the Waiver, to pursue the Carlsberg Transaction for a specified period of time. There is therefore a risk that Carlsberg may acquire Britvic plc whilst Marston's remains a joint venture partner in CMBC, which may result in reduced commitment and resources from Carlsberg in the success of the joint venture and/or undermine customer or supplier confidence in the joint venture. The Waiver is limited in time and specific to the Carlsberg Transaction.

2.4.      Termination of the SHA and amendments to the SDA

The SHA will terminate on completion of the Transaction. The SDA will continue on substantially the same terms, save that it will be amended to include certain termination events that were previously in the SHA (as further described in paragraph 1.1(B) of Appendix I (Material Contracts)). In particular, the SDA (as amended by the SDA Deed of Amendment) can be terminated by one party if the other party suffers a change of control event. If the Transaction proceeds, the SDA (as amended) will therefore include certain additional termination events which it did not previously contain.

3.         Existing material risk factors to the Group which will be impacted by the Transaction

3.1.      Carlsberg UK Limited Pension Scheme liabilities

Carlsberg's UK defined benefit pension scheme, the Carlsberg UK Limited Pension Scheme (the "Carlsberg Scheme"), falls within the joint venture perimeter.

The most recent full actuarial valuation of the Carlsberg Scheme was carried out as at 5 April 2022. As at that date, the Carlsberg Scheme had assets with an estimated market value of £658 million and liabilities with an estimated value of £719 million (valued using ongoing technical provisions basis assumptions agreed with the scheme's trustee as part of the valuation). An estimated update as at 31 December 2023 indicated assets valued at £462 million and liabilities of £499 million. The next full valuation is due as at 5 April 2025.

Under the UK pension scheme funding regime, two Carlsberg entities which were contributed to CMBC (Carlsberg UK Limited and Carlsberg Supply Company UK Limited) have primary liability for funding the Carlsberg Scheme. However, all companies within the Group are also technically within the scope of certain powers of the UK Pensions Regulator should the Pensions Regulator exercise its powers in relation to the Carlsberg Scheme, and will remain so notwithstanding completion of the Transaction. There is therefore an ongoing risk that companies in the Group may incur liabilities in respect of the Carlsberg Scheme in the future.

The Share Purchase Agreement provides for Carlsberg to indemnify the companies in the Group against any amounts required to be paid to the Carlsberg Scheme for a period of six years from completion of the Transaction. The Board is satisfied that this indemnity is appropriate in the context of the Transaction, and that it adequately retains the protections made available to the Marston's Group under the SHA in respect of the aforementioned risk. 

APPENDIX III
SIGNIFICANT CHANGE IN THE ISSUER'S FINANCIAL POSITION

1.         The Group

There has been no significant change in the financial performance or financial position of the Group since 30 March 2024, being the end of the last financial period for which financial information of the Group has been published.

2.         CMBC

Apart from the announcement regarding San Miguel as set out in this announcement, there has been no significant change in the financial performance or financial position of CMBC since 30 March 2024, being the end of the last financial period for which financial information of CMBC has been published.[11]

APPENDIX IV
LEGAL AND ARBITRATION PROCEEDINGS

1.         The Group

There are no governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which Marston's is aware) during a period covering the 12 months prior to the date of this announcement which may have, or have had in the recent past, a significant effect on Marston's and/or the Group's financial position or profitability.

2.         CMBC

There are no governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which CMBC is aware) during a period covering the 12 months prior to the date of this announcement which may have, or have had in the recent past, a significant effect on CMBC and/or CMBC's financial position or profitability.

APPENDIX V
RELATED PARTY TRANSACTIONS

1.         Related party transactions

Save as disclosed in: (i) note 12 on page 22 of the HY 2024 Results; (ii) note 12 on pages 124 and 125 of the 2023 Annual Report; and (iii) note 12 on page 136 of the 2022 Annual Report, the Company has not entered into any related party transactions (within the meaning ascribed to that term in UK-adopted international accounting standards) during any of the financial years ended 1 October 2022, 30 September 2023 and otherwise up to the date of this announcement.

IMPORTANT NOTICES

No statement in this announcement is intended as a profit forecast and no statement in this announcement should be interpreted to mean that the future earnings per share, profits, margins or cash flows of Marston's following the Transaction will necessarily match or be greater than the historical published earnings per share, profits, margins or cash flows of Marston's.

This announcement may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements may be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. Forward-looking statements may and often do differ materially from actual results. Any forward-looking statements reflect Marston's current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to Marston's business, results of operations, financial position, liquidity, prospects, growth and strategies. Forward-looking statements speak only as of the date they are made.

You are advised to read this announcement in its entirety for a further discussion of the factors that could affect Marston's future performance. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements in this announcement may not occur.

This announcement does not constitute and should not be construed as, an offer to purchase or sell or issue securities, or otherwise constitute an inducement, invitation, commitment, solicitation or recommendation to any person to purchase, subscribe for, or otherwise acquire securities in Marston's, or constitute an inducement to enter into any investment activity in any jurisdiction. Nothing contained in this announcement is intended to, nor shall it, form the basis of, or be relied on in connection with, any contract or commitment whatsoever and, in particular, must not be used in making any investment decision.

The distribution of this announcement in or from certain jurisdictions may be restricted or prohibited by the laws of any jurisdiction other than the UK. Recipients of this announcement are required to inform themselves of, and comply with, all restrictions or prohibitions in such other jurisdictions. Any failure to comply with applicable requirements may constitute a violation of the laws and/or regulations of such other jurisdictions.

This announcement has been prepared for the purposes of complying with the applicable law and regulation of the UK (including the UK Listing Rules and the Disclosure Guidance and Transparency Rules) and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws and regulations of any jurisdiction outside of the UK.

Save as required by the Market Abuse Regulation, the Disclosure Guidance and Transparency Rules, the UK Listing Rules or by applicable law, each of Marston's and J.P. Morgan Cazenove expressly disclaim any intention, obligation or undertaking to update, review or revise any of the information or the conclusions contained herein, including forward-looking or other statements contained in this announcement, or to correct any inaccuracies which may become apparent whether as a result of new information, future developments or otherwise.