The proprietor of Cafe Rouge is in talks to purchase Chiquito’s and Frankie and Benny’s, two of Britain’s best-known restaurant chains.
Sky News has learnt that The Big Table, which is backed by the non-public fairness agency Epiris, is negotiating the acquisition of the 2 manufacturers from The Restaurant Group (TRG), the London-listed proprietor of Wagamama.
Banking sources mentioned this weekend that the talks have been at a complicated stage and will result in an imminent settlement.
They warned, nonetheless, {that a} deal may but disintegrate.
If accomplished, the takeover would contain TRG paying a multimillion pound dowry to The Big Table to take Chiquito’s and Frankie and Benny’s off its palms, sources mentioned this weekend.
The two chains have acted as a drag on TRG’s bettering monetary efficiency, with gross sales development lagging the broader informal eating market in recent times.
They have additionally bolstered the corporate’s want to reinvest extra aggressively in its profitable Wagamama, pubs – which commerce as Brunning & Price – and concessions divisions.
The informal eating sector as an entire has been harm by hovering inflation and stress on shopper spending.
TRG, which confirmed on Friday that chairman Ken Hanna would step down regardless of the corporate’s bettering outlook, mentioned this week that the Chiquito’s and Frankie & Benny’s estates have been being shrunk from 116 websites on the finish of final yr to an anticipated 76 by the tip of this.
One analyst mentioned this weekend {that a} deal would make sense for each events, with The Big Table including the 2 chains to a portfolio which incorporates Amalfi, Banana Tree, Bella Italia, Cafe Rouge and Las Iguanas.
The sale of Chiquito’s and Frankie & Benny’s would comprise roughly 75 websites, with TRG’s leisure operations using about 3,000 folks.
That would add meaningfully to The Big Table’s property, which in keeping with its web site consists of greater than 160 eating places throughout the UK.
Selling them to a longtime restaurant group would shield the pursuits of these staff whereas additionally eradicating a brake on TRG’s future development prospects, one other analyst added.
The firm’s half-year outcomes this week have been well-received by the City, with the extra fillip of a modest enhance to full-year revenue expectations.
TRG has been on the centre of one of many inventory market’s most protracted activist campaigns, with Oasis Management – now the corporate’s greatest shareholder with an 18% stake – having referred to as on Mr Hanna to step down.
Irenic Capital Management, a US-based hedge fund, had additionally urged him to stop over what it described as company governance failings – a view opposed by many long-term traders.
One of these, Columbia Threadneedle Investments, this week lower its stake in TRG from about 16% to 10%.
Andy Hornby, the Wagamama proprietor’s chief govt, mentioned on Friday that Mr Hanna had been an “exceptional” chair.
The chairman’s determination to exit, which was attributed to “personal reasons”, is alleged to have been motivated by a want to determine a ceasefire with the activist funds which now collectively personal greater than 20% of TRG.
Jason Molins, an analyst at Goodbody, described the earnings assertion as “another reassuring update from the group”, whereas Douglas Jack at Peel Hunt wrote: “Our view is that the greatest value will be realised by allowing the company more time to rebuild profitability.”
On Friday, shares in TRG closed up greater than 7% at 47.5p, giving the corporate a market worth of £363m.
Spokesmen for Epiris and TRG each declined to remark.
Content Source: information.sky.com