Wagamama owner the Restaurant Group (TRG) has agreed to a takeover by private-equity firm Apollo Global for £506 million (€585.8 million), after a year of financial struggles and investor pressure for the UK business.
Under the terms of the deal, announced on Thursday, TRG’s shareholders will get 65 pence in cash for each share held – a premium of about 34% on the stock’s last closing price.
The shares jumped by 37.1%, to 66.5 pence, in early trading – up by nearly 55% this year.
Over the past year, the group – which owns about 400 restaurants and pubs across the UK – has struggled with falling margins, amid soaring costs and sluggish post-pandemic recovery.
There has also been pressure from shareholders and activist investors Irenic and Oasis in recent months to change management and improve profitability.
Chairman Ken Hanna agreed to step down last month, after the company forecast higher annual profits. TRG, which owns popular Japanese noodle chain Wagamama, also agreed to sell its loss-making Frankie & Benny’s and Chiquito brands to Café Rouge owner the Big Table Group, as part of efforts to bolster margins and cut debt.
The company’s board has unanimously recommended that shareholders vote in favour of the deal, which has an enterprise value of £701 million (€811 million) and is expected to be completed in early 2024.
In a statement, US private-equity firm Apollo noted that it believes that the development of the company will be best served as a private business, with access to capital and the benefit of a long-term investment approach.
‘We understand that this was an unsolicited approach, so it is possible that it flushes out another bid,’ Stifel analysts wrote in a note, adding that they, however, expect the deal to go through.