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The Restaurant Group accepts the offer of Apollo global management

Wagamama’s owner says yes to a 585 million euro offer

Fly on the Stock exchange The Restaurant Group, british chain of restaurants and pub owner of the brand Wagamama also known in Italy (is managed under license by the Chef Express of the Cremonini group), after accepting the public offer to purchase 506 million pounds (amounting to almost 585 million Euro) launched by private equity firm Apollo Global Management via Rock Bidco, a company indirectly owned by Apollo’s managed funds. The shares of the small cap Restaurant group, yesterday immediately after the announcement, jumped up 37.1% to 66.5 pence, the highest percentage gain since april 2020. 

As a statement indicates, the board of directors of The restaurant group and Rock Bidco have reached an agreement for an acquisition offer on all the capital of the company: the agreements provide for the payment of 65 pence in cash for each share. The offer represents a premium of 67% compared to the weighted average price of Trg in the 12 months to 11 October, 49% compared to the price of the six months and 34% compared to the closing of 11 october.

The company’s board of directors unanimously recommended that shareholders vote in favour of the transaction, which has a business value of £701 million (over 810 million Euros) and is expected to be completed by early 2024. Apollo had previously submitted about three proposed takeovers of the British company.

Over the past year, the group, which has around 400 restaurants and pubs across the UK, has struggled with falling profit margins caused by soaring costs and a slow post-pandemic recovery. In addition, in recent months, shareholders and investors Irenic Capital and Oasis Management have exerted pressure to change management and improve profitability.

In today’s announcement, the companies said they had received commitment from both investors, olssia Irenic Capital and Oasis Management that together hold a share of almost 20% of The restaurant group, to vote in favor of the agreement.

President Ken Hanna agreed to step down last month after the company predicted an increase in annual profits. A month ago The restaurant group, which owns the popular Japanese noodle chain Wagamama, also agreed to sell the (loss-making) brands Frankie & Benny’s and Chiquito to Big Table Groupl, brand owner of Cafe Rouge: This was part of efforts to strengthen margins and reduce debt. The US-based Apollo Fund has stated that it believes that the UK company will improve its position as a private company, with access to capital and with the benefit of a long-term investment approach. 

The operation, however, may have some unexpected implications. According to analysts, in fact, "it is possible that you come to another offer, since it is an unsolicited approach". Despite this, experts add that, however, they expect the operation to go ahead. According to some analysts, any news could derive from the fact that the price of the offer is considered "too low", seen the efforts of the company to improve the margins and to reduce the leverage.

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EFA News - European Food Agency