The Motley Fool

Marston’s shares: what will I do now about the falling share price?

Image source: Getty Images.

On Thursday, Marston’s (LSE: MARS) shares fell by about 12.5% as Platinum, the US private equity firm, walked away from bidding for the pub group.

The pub chain rejected offers of 88p a share and 95p a share in December, and a third offer of 105p at the end of January.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Investing in pub groups as the vaccine rollout continues

There’s no doubt pubs have been hit hard by lockdowns. All over the country, pubs are shut and have been for a long time. Yet over the last few months, the group’s share price has risen (although it’s well down over the three-year and five-year periods). Nonetheless, why are the shares rising?

I think primarily it relates to the excitement around the unsolicited bid for the group. There’s now a growing expectation that the whole sector may go through a period of mergers and acquisitions as smaller rivals struggle and prices are depressed because of the pandemic. The original Marston’s bids did represent a modest premium to the share price at the time, so there could be other bids at a larger premium. This could potentially be good news for existing shareholders.

There’s also an expectation that the vaccine rollout will mean pubs can reopen later this year, which is helping lift share prices. Competitor JD Wetherspoon has seen a smaller boost to its shares in recent months as well.

There’s also Marston’s joint venture with Carlsberg which has given it cash, which is helpful at the moment. That too will likely have boosted investor sentiment and could help the group for years to come.

On the other hand, there are worries around new variants of the vaccine, and ministers have been unable to say when pubs can reopen. Because of this, I think buying the shares as the global pandemic carries on is still fraught with risk.

Would I buy Marston’s shares?

It’s this risk that would keep me awake at night if I was a Marston’s shareholder. There’s the question of when it might be able to grow revenues again, on top of the issue of its net debt. At the time of its first-half results last year, that was well over £1bn.

Despite falling recently, the share price is still well up on where it was just a few months ago. In that time, very little has changed, apart from the vaccine rollout success to date. For me, as a long-term investor, I’m not seeing much in the shares to suggest they are worth buying.

So, although the share price has fallen this week, I won’t be adding Marston’s to my portfolio. The shares haven’t fallen enough, in my view, to offer me a sufficient margin of safety. I’d only invest in the shares if multiple new bids came through for the group, at a significant premium to the current share price. That may happen, but it also may not.

One stock for a post-Covid world...

Covid-19 is ripping the investment world in two…

Some companies have seen exploding cash-flows, soaring valuations and record results…

…Others are scrimping and suffering.

Entire industries look to be going extinct.

Such world-changing events may only happen once in a lifetime.

And it seems there’s no middle ground.

Financially, you’ll want to learn how to get positioned on the winning side.

That’s why our expert analysts have put together this special report.

If the pandemic has completely changed our lives forever, then they believe that this stock, hidden inside the tech-heavy NASDAQ, could be set for monstrous gains...

Click here to claim your copy now — and we’ll tell you the name of this US stock… free of charge!

Andy Ross owns no share mentioned. The Motley Fool UK has recommended Marstons. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.