UK: Young & Co's Brewing exits Wells & Young's Brewing Co
Young & Co's Brewing sells Wells & Young's stake to focus on pubs
Young & Co's Brewery has pulled out of brewing in the UK by exiting its joint-venture with Charles Wells, amid tough times for beer sales in the country.
Young's said today (9 August) that it has sold its 40% stake in Wells & Young's to its joint-venture partner for GBP15.1m (US$24.6m) in cash. Payment will be staggered in GBP5m installments between February 2012 and February 2014.
The deal comes amid weak consumer demand for beer in the UK and, more specifically, Wells & Young's loss of the supply and distribution contracts for Corona and Red Stripe lagers in the country. The loss of Corona will damage Wells & Young's profitability, Young's said.
"This transaction is mutually beneficial for both Young's and Charles Wells," said Young's CEO Stephen Goodyear. "Young's is focused on investing in its premium pub estate whilst Wells & Young's is looking to invest in developing new and existing beer brands."
The CEO of Charles Wells, Paul Wells, said: "With Wells and Young’s now a wholly-owned subsidiary of Charles Wells Ltd, we will have greater flexibility and autonomy to develop the brewery and its brands.”
Wells & Young's will retain rights to the Young's beer brands. It will also continue to supply drinks to Young's pubs, although this deal has been cut from a three-year, exclusive supply agreement to a two-year rolling contract. There are also now two agreements - one for beer and cider and one for wine and spirits - where previously there was only one contract.
Young's cannot exit the supply deal within the first two years, it said.
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