26th Oct 2023 12:43
(Alliance News) - Stock market investors on Thursday were savouring a potential takeover battle for Restaurant Group PLC, as Pizza Express-owner Wheel Topco put its hat in the ring.
On Wednesday, Sky News reported that the pizza restaurant chain is at the preliminary stages of evaluating whether to make a rival offer for Wagamama noodle shop-owner Restaurant Group, which earlier this month agreed to be bought by Apollo Global Management for just over GBP500 million.
Apollo is a New York-based alternative asset manager. Via acquisition vehicle Rock BidCo Ltd, it is offering to pay 65 pence per Restaurant Group share in cash.
Shares in Restaurant Group were up 2.0% to 67.80 pence each in London on Thursday around midday.
Other potential counter-bidders are also said to be examining whether to make offers, Sky reported.
Early Thursday, Restaurant Group confirmed it has received a due diligence request from the Pizza Express owner. It confirmed that Wheel Topco is evaluating a possible offer for the company.
"No written or verbal indicative proposal relating to a possible offer, including as to terms, price or form of consideration, has been made to the board of TRG by Wheel Topco," Restaurant Group added.
AJ Bell's Danni Hewson commented: "The idea of combining two of the UK's most popular casual dining chains has logic to it and may prompt Pizza Express to push hard to rival private equity firm Apollo's existing GBP500 million bid, particularly given former Wagamama chair Allan Leighton now occupies the same position at Pizza Express."
added Peel Hunt's Douglas Jack: "A merger with Pizza Express could bring synergies. Pizza Express once had over 500 restaurants. It is now down to about 350. Its reduction in size is similar to the restaurant market. Its supply peaked in 2015 when there were over 27,500 restaurant in the UK. There are now 21,000."
Restaurant Group has about 380 restaurants in total, including its other brand Brunning & Price.
In September, it agreed to sell its Leisure Business, comprised of the Frankie & Benny's and Chiquito restaruant chains, to Big Table Group Ltd, the owner of the Bella Italia, Las Iguanas and Banana Tree chains. Restaurant Group is paying Big Table to take the loss-making business off its hands.
By Sophie Rose, Alliance News reporter
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