20th Nov 2018 12:23
LONDON (Alliance News) - Another major investor in The Restaurant Group PLC has opposed the company's proposed takeover of Asian food chain Wagamama.
Columbia Threadneedle, which owns 7.7% of Restaurant Group, said there were too many "red flags" surrounding the deal.
James Thorne, UK equities fund manager at the asset management firm, said: "The strategic appeal of combining two good businesses may be understandable, but the size and price of the deal at this point in the cycle throws up too many red flags. The share price plunge reflects the depth of concern there is."
The announcement is the latest in a tit-for-tat between investors as they prepare to vote on the GBP559 million acquisition on Wednesday.
On Tuesday morning, investor advisory service Glass Lewis recommended voting in support of the deal, echoing advice from the Institutional Shareholder Services last week.
Glass Lewis advisers said: "Strategically, we understand that the proposed acquisition of Wagamama fits with Restaurant Group's existing industry focus on restaurant operations in the UK and we expect the combined company could likely benefit from greater economies of scale and a more attractive growth profile."
Top-five shareholder JO Hambro also signalled its support for the takeover over the weekend.
But other investors have opposed the move, with US activists GrizzlyRock Capital and Vivaldi Asset Management arguing it would "dramatically" weaken Restaurant Group's balance sheet.
Restaurant Group, which owns leisure brands including Frankie & Benny's and Chiquito, announced its intention to acquire rival restaurant chain Wagamama in a deal worth GBP559 million in October.
It will embark on a rights issue to raise GBP315 million and draw on a GBP220 million revolving credit facility to bankroll the deal.
source: Press Association
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