An offer for Marston’s could come in at above 100p per share, according to analysts Liberum, in a note issued following the news that Platinum Equity Advisors had received an unsolicited non-binding proposal from the American PE firm regarding a possible cash offer for its share capital.

As yet no firm offer has been made, but the announcement saw Marston’s shares rose up to their current pro forma Net Asset Value (NAV), said Liberum.

“Based on a pre-Covid trailing EBITDA of c£180m, current NAV of 87p, and recent transaction comparatives (Greene King and EI Group), we believe an offer could come at above 100p, however this is dependent on many factors. We move our recommendation to HOLD given the upside risk balanced with uncertainty over whether a final offer can be agreed,” read the note.

Recent years have seen both , Greene King (£2.7bn) and EI Group (£1.3bn), taken private following acquisitions by CK Noble (UK) Ltd and Stonegate Pub Company respectively.

“These transactions valued the businesses on c9.5x and c11.4x trailing EV/EBITDA. Marston’s FY19 EBITDA (excluding its now disposed of Brewing Business), which is unaffected by Covid-19, was £182m.

“If we apply a 10x multiple to this, in line with the Greene King and EI Group acquisitions, and account for current net debt levels, then this values the business on c£656m, equivalent to c1.04p per share,” said Liberum. Its current pro-forma NAV is 87p, which we forecast will rise to 111p by FY23E. We therefore expect any offer to come within this range.”

The analyst said at this stage it does not expect any other listed or traded operators to enter the fray but it would not be surprised if other private equity houses had also been looking into the sector.

It added that this latest announcement is regarding M&A in the pub sector, “signalling an impending step up in M&A activity”. Earlier this month it was announced that ex-Greene King chief executive Rooney Anand, backed by a US PE firm, has raised £200m to invest in UK pub assets, while Gerry Carroll and Mark McGinty, who co-founded Hawthorn Leisure, are also on the hunt for opportunities after teaming up with James Croft, formerly group strategy and retail director at Ei Group, to launch the Valiant Pub Company.

“Therefore, the possible bid for Marston’s does not come as a huge surprise, given its high-quality freehold backed estate (c90% FH) and relatively high debt levels compared to peers,” read the note.

“Christie & Co reported that average pub prices fell by -6.4% in 2020, and are expected to continue to decline in 2021. This will create clear acquisition opportunities for private equity players and better-funded operators to acquire pub assets and pub estates. This should support wider sector valuations including Mitchells & Butlers (Joe Lewis/Peidmont holds c27% stake and Elpida c23%) and JDWetherpoon (Tim Martin stake reduced to c21%).”

In accordance with the City Code on Takeovers and Mergers, Platinum is required to either announce a firm intention to make an offer for the company or not by 5pm on Friday 26 February.