Restaurant Group to be taken over by PE firm Apollo in £701m deal

Wagamama owner The Restaurant Group said on Thursday that it has agreed to be taken over by private equity firm Apollo in a £701m deal.

Under the terms of the deal, TRG shareholders will receive 65p in cash per share, which is a premium of around 34% to the closing share price on Wednesday.

TRG chair Ken Hanna said: "TRG operates a diverse portfolio of some of the UK's leading hospitality brands. As a result of ongoing positive management actions and the margin accretion plan we announced in March this year, the group has 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. In addition, the TRG board and management of TRG have reviewed in detail the strategic options available to the group, resulting in the announcement of the proposed sale of the leisure business.

"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."

At 1200 BST, the shares were up 38% at 66.51p.

Russ Mould, investment director at AJ Bell, said: "The Restaurant Group’s turnaround efforts have led to a surprise takeover offer. No sooner had the company struck a deal to sell its Frankie & Benny’s and Chiquito chains, along comes private equity offering a wad of cash to take the remainder of the business private.

"Having a new owner with deep pockets might give management better options to turbocharge growth. The offer made the share price jump to its highest level since April 2022.

"Some shareholders might think this is fantastic news, others might consider the business to be worth a lot more than the 65p per share offered by Apollo when factoring its potential over the coming years. Indeed, it was only 2021 that the share price was trading at twice this level.

"The fact the share price at 66.4p is trading slightly higher than the takeover offer suggests the market believes we could either see a competing bid or shareholder opposition to the price in an attempt to make Apollo raise its offer. Such moves have been commonplace over the past few years, with private equity players throwing their hat into the ring to gauge appetite and then upping their offer to a more reasonable level.

"Interestingly, activist investors Oasis and Irenic Capital, who own 17.8% and 1.9% stakes respectively, have voted in favour of the offer. Therefore, any opposition over the takeover price will have to be led by asset managers Columbia Threadneedle, Royal London and Cyrus Capital, being three of the other biggest shareholders on the register."