15th Jan 2025 09:28
(Alliance News) - Loungers PLC on Wednesday recommended a final increased offer for takeover by Fortress Investment Group LLC.
The New York-based investment manager has proposed to buy the Bristol-based bar and restaurant chain for 325.00 pence per share, valuing Loungers at around GBP354.4 million.
This implies a Loungers enterprise value of GBP366.6 million, and is about 4.8% higher than the original offer, which was for 310.00p per Loungers share.
The updated price represents a 37% premium on Loungers's share price of 238.00p at Tuesday's market close, and is up 36% on the average Loungers share price of 239.20 in the year to November 27.
Loungers shares rose 3.9% to 320.00p each on Wednesday morning in London.
If Fortress's buyout were to fail, Loungers said, there may be "detrimental" consequences.
Wednesday's offer follows months of sales talks with various bidders. Loungers recommended an acquisition in November, following the release of its half-year report, in the hopes it would address the share price's failure to reflect "strong" performance. The company's pretax profit rose to GBP6.0 million in 2024 half-year, up 51% from GBP3.9 million the year prior.
Loungers said it anticipates 2025 will be "challenging" for British consumers, as companies raise prices to curb higher national insurance costs. Loungers also said the "poor liquidity" of its shares would likely restrict trading volumes. The company reported low confidence in an improved consumer stock outlook for "the foreseeable future".
Fortress reported irrevocable support from Loungers Directors Alex Reilley and Nick Collins, whose collective stake in Loungers amounts to 7.5%. It also has commitments from major stakeholder Lion Capital LLP, which owns around 26% of Loungers.
Fortress requires approval from Loungers shareholders with a collective stake of at least 75%. Shareholders will vote on the bid at a meeting scheduled January 30.
Fortress's Managing Director Domnall Tait, said: "This increased offer for Loungers reflects our continued belief in the business and its management team, and we look forward to supporting them through the next stage of growth. Notwithstanding the recent challenges, Fortress remains a strong believer in the UK."
By Holly Munks, Alliance News reporter
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