Stock market volatility following Brexit vote threatens Revolution Bars' acquisition plans
Revolution Bars' plan to acquire four sites in Edinburgh is hanging in the balance following the Brexit vote, the group has warned.
In a Stock Exchange announcement the group, which operates 62 bars in the UK under the Revolution and Revolución de Cuba brands, revealed it was in talks to acquire four bars in Edinburgh for around £16m but the Brexit vote could impact on the deal.
It said: "Discussions are ongoing and, particularly in light of the results of the EU Referendum announced this morning, may or may not result in any transaction, whether as described above or at all, being agreed."
The deal is dependent on funding being raised via new debt, a small placing of new ordinary shares for cash and the issue of ordinary shares to the vendors, which could be made difficult in a volatile stockmarket.
The group said the proposed acquisition is "significantly earnings enhancing" and will add a new brand to Revolution Bars' portfolio, which it plans to roll out "to other sites".
A spokesman for the group declined to identify the owner of the four bars. He added that the deal was in question "in the light of the considerable uncertainty following the EU Referendum and as the company needs to raise debt and equity and because the stock market is down by about 7%-8% today."
He added that Revolution Bars Group was still hopeful of convincing shareholders that the deal "is the right thing to do".
The group said it is continuing to trade well in the second half of the financial year ending 30 June 2016 following a strong performance in the first half.
Its expansion plans are also "progressing ahead of schedule", with three new bars set to open this year in Liverpool, Stafford and Reading. The Liverpool and Reading sites will be Revolución de Cuba bars whilst the Stafford location will be a Revolution bar. The two new Revolución de Cuba sites, which will be food-oriented, are large format versions with customer square footage of over 6,000 sq ft in each site.
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