An investor in The Restaurant Group has said it will vote against the planned acquisition of Wagamama because the deal "throws up too many red flags".
The owner of Garfunkel's, Frankie & Benny's and Chiquito has conditionally agreed the purchase of 133-site Wagamama in a deal that values the company at £559m.
But many shareholders are said to have been shocked by the price tag, which is more than 13 times the group's EBITDA.
James Thorne, UK equities fund manager at Columbia Threadneedle Investments, which owns 7.7% of The Restaurant Group, said: "The strategic appeal of combining two good businesses may be understandable, but the size and price of the deal at this point in the cycle throws up too many red flags. The share price plunge reflects the depth of concern there is."
The Restaurant Group is planning to raise £315m through the issue of 290 million new shares to fund the acquisition, with existing shareholders offered 13 new for nine old shares based at 108.5p.
Shareholders will vote on the proposals at a meeting on 28 November.
Wagamama, founded by Alan Yau in 1992, is owned by private equity firms Duke Street and Hutton Collins. The proposal would see The Restaurant Group pay £357m in cash, as well as assuming Wagamama's debt.