A group of private equity investors bidding for Italy's Old Wild West restaurant chain is fretting over Rome's plans to shut shops on Sundays, four sources familiar with the matter told Reuters, as the ban would undermine the €700 million deal.
Spending around €300 million to buy out holding company Cigierre, BC Partners, which took control of the Old Wild West steakhouse chain in 2016, hired Rothschild and JPMorgan earlier this year to find a new owner, the sources said.
The sale has drawn interest from buyout funds Carlyle, Permira, Onex, Apax and Cinven which submitted indicative bids ahead of a deadline on October 15, two of the sources said.
London-based BC Partners is expected to shortlist bidders for the final round of the auction by the end of the week, the sources said.
BC Partners, Cinven, Carlyle and Onex declined to comment while Apax was not immediately available for comment.
The business has been valued by its suitors at more than €700 million, the sources said, with one adding some bids are in excess of €750 million.
But its performance will be hit hard if the new populist government's proposals for the Sunday closure of shops comes into force, the sources said.
Cigierre runs more than 180 restaurants across Italy and its flagship brand Old Wild West, very active in mid-sized Italian towns, has a number of sites inside shopping malls.
Italy's deputy prime minister Luigi Di Maio, leader of the anti-establishment 5-Star Movement, has spoken of introducing a ban on Sunday shopping in large commercial centres before the end of the year to defend family traditions.
He has subsequently said not every shopping mall would be affected, with exemptions in tourist areas.
Small shopkeepers in Italy have long sought to overturn a 2012 bill that liberalised Sunday trading, saying their businesses face unfair competition from the big malls.
Cigierre had revenues of around €140 million last year, up from €120 million in 2016, according to Italy's company register.
Its core earnings are expected to hit €80 million in the next financial year, one of the sources said.
"A Big Blow"
"Old Wild West restaurants are mainly located on the outskirts of Italian cities, inside shopping malls or motorway service stations and this bill would be a big blow to the company's cash flow," the source said.
But two other sources close to the matter played down the impact of the Sunday ban, saying the business was well diversified with only a fraction of the overall network in malls.
A fourth source said the auction had managed to draw interest from large buyout funds despite adverse market conditions and a general lack of appetite among international investors to increase their exposure to the euro zone's third-biggest economy.
The Italy-Germany 10-year bond yield spread is now around 305 bps, near its widest in five years. It has swelled 150 bps this year, the most since 2011, as Rome's budget plans create tension with the European Union and put Italian credit ratings at risk of downgrades.
Cigierre also controls the Wiener Haus restaurant chain as well as pizza chain Pizzikotto, sushi restaurants Shi's and American style restaurants America Graffiti.