The owner of Frankie & Benny’s and Wagamama will be taken private after it accepted a £506m takeover offer from the US buyout group Apollo.
The Restaurant Group (TRG), which operates more than 400 outlets in the UK, said it had initially rebuffed an offer from Apollo but that further negotiations had finally resulted in an “appropriate” offer of 65p a share.
Its chair, Ken Hanna, said that while TRG had recovered from the challenges of the pandemic, the group was still facing economic headwinds, including inflation that has pushed up costs and caused consumers to pull back on spending.
“TRG have reviewed in detail the strategic options available to the group, resulting in the announcement of the proposed sale of the leisure business”, he said.
“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. As such, the TRG directors intend to unanimously recommend the offer to TRG shareholders.”
The board said it planned to unanimously recommend investors accept the offer, which represents a 34% premium on Wednesday’s closing price of 48p.
At least 75% of shareholders will have to back the deal, which could be completed as early as next spring and would see its shares taken off of the London Stock Exchange and into private hands.
TRG already has a head start on gaining approval however, having convinced its largest activist shareholders, Oasis Management and Irenic Capital, who together own a fifth of the company’s shares, to back the deal.
The deal with Apollo comes after a long-running battle with Oasis Management, which in February, accused the board of mismanaging the company and overseeing “one of the worst performing share prices of any UK leisure company”.
Oasis said the at the time that there was a “failure of oversight” by the TRG board, which had led to a “strategic stagnation” across it casual dining brands. It subsequently pushed for a board seat, which TRG denied.
Hanna, who announced he would step down last month for “personal reasons”, said on Thursday that thanks to the “ongoing positive management actions” and a subsequent improvement in margins, the group had “recovered well from the challenges of the pandemic and the cost of living crisis”.
“This is evidenced by the continued strength of our trading performance versus the broader hospitality sector and the share price increasing 55% this year,” he added.
TRG shares jumped 37% on Thursday morning to more than 66p a share.
In the stock market announcement, Apollo said it intends to “work with the existing management and employees of TRG to support the business with a view to providing attractive and sustained growth and development opportunities for TRG’s stakeholders”.
It added: “Apollo is highly supportive of TRG’s management strategy and it is confident in the future prospects of TRG’s businesses.”