12th Oct 2023 08:35
(Alliance News) - Restaurant Group PLC on Thursday said it has agreed to be acquired by funds managed by private equity firm Apollo Global Management Inc, soon after itself having sold off an underperforming business.
Glasgow-based Restaurant Group owns the Wagamama chain of Asian noodle shops. It also operates pubs and travel food concessions. In total, it operates 380 restaurants and pubs across the UK.
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. The offer values the equity of Restaurant Group at GBP506 million and the company as a whole, including debt, at an enterprise value of GBP701 million. It noted that this is 9 times Restaurant Group's adjusted earnings before interest, tax, depreciation and amortisation in the 12 months that ended July 2.
Restaurant Group shares had closed Wednesday in London at 48.45p and were up 37% to 66.30p early Thursday, giving a market capitalisation of GBP506.6 million.
The company said its board unanimously recommends the offer to shareholders, and acceptances for it already have been received from shareholders representing 19.9% of its total.
Only a month ago, Restaurant Group said it had agreed to sell its "challenged" Frankie & Benny's and Chiquito chains to the owner of Bella Italia, Las Iguanas and Banana Tree, saying this would reduce its debt and improve its profit margin.
The buyer, Big Table Group Ltd, will pay a nominal GBP1 for Restaurant Group's loss-making Leisure business and will receive a "contribution" from Restaurant Group of GBP7.5 million.
On Thursday, Restaurant Group confirmed this deal is expected to be completed on October 30.
"The TRG board and management of TRG have reviewed in detail the strategic options available to the group, resulting in the announcement of the proposed sale of the Leisure business," Chair Ken Hanna said, explaining the boards decision to accept the Apollo offer.
"The TRG board continues to have confidence in the plan, but is cognisant of the premium and the certain value of the Apollo offer against the backdrop of a challenging macro-economic environment."
By Tom Waite, Alliance News editor
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