5th Apr 2023 14:30
(Alliance News) - Fulham Shore PLC soared 33% on Tuesday, after the Franco Manca and The Real Greek owner agreed to a GBP93.4 million takeover.
"Named after his father's love of Fulham FC, David Page has scored yet again by attracting a takeover bid for his restaurant business, Fulham Shore. Japanese group Toridoll has swooped in, spying an opportunity to expand the group's Franco Manco brand across the UK and overseas," AJ Bell analyst Danni Hewson commented.
"A good restaurateur spots a gap in the market, rolls out a proposition with a close eye on costs and getting good deals on leases, and then waits for it to build scale before selling the chain."
Tokyo-listed food company Toridoll Holdings will pay 14.15 pence per share, a 35% premium to Fulham Shore's Tuesday closing price of 10.5p. The deal gives Fulham Shore an equity value of GBP93.4 million.
"One might argue that the 14.15p takeout price for Fulham Shore doesn't fully price in its potential. Eighteen months ago, it was trading close to 20p a share, after all. But in an economically uncertain environment, the price on the table might seem reasonable given the circumstances and possibly the best deal that could emerge for some time," AJ Bell's Hewson commented.
Shoe Capital analysts Bradley Hughes and Greg Johnson noted that the acquisition price is just 2.5% below Shore Capital's fair value of 14.5p.
Shares in Fulham Shore were up 33% to 13.92 pence each in London on Wednesday afternoon. Over the past 12-months the stock has dropped 16%.
Hughes and Johnson said that they expect the directors "are happy" with the offered priced and are "unlikely to go for a bigger bite of the cherry." They added that a third-party counter offer is still possible, though.
Restaurant sector-focused private equity fund Capdesia will also be involved in the deal. Toridoll's stake will eventually reduce to no less than 51%. Toridoll currently runs the Marugame Udon, Shoryu and Wok to Walk chains in the UK.
Fulham Shore Executive Chair David Page said: "We are proud of the significant progress that Fulham Shore has made since it was founded in 2012. We are proud of our two brands, Franco Manca and The Real Greek, and the growth we have delivered for Fulham Shore. Whilst we remain excited about the prospects for the business on a standalone basis, we have been in discussions with both Toridoll and Capdesia and received a proposal that we believe is compelling for all of our stakeholders. We believe Toridoll and Capdesia's experience in successfully building restaurant businesses and their long-term vision for Fulham Shore, will enable Fulham Shore to fulfil its long-term potential."
Shore Capital analysts added that there is a "significant opportunity for Fulham Shore to expand its presence in the UK." Currently the company operates 70 Franco Manca restaurants and 50 The Real Greeks restaurants.
Shore Capital cut its rating for Fulham Shore to 'hold' from 'buy'
By Sophie Rose, Alliance News reporter
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