The Restaurant Group investor says Wagamama deal ‘throws up too many red flags'

20 November 2018 by
The Restaurant Group investor says Wagamama deal ‘throws up too many red flags'

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.

The Restaurant Group agrees £559m Wagamama acquisition>>

The Restaurant Group confirms £315m rights issue to fund Wagamama acquisition>>

Get The Caterer every week on your smartphone, tablet, or even in good old-fashioned hard copy (or all three!).

The Caterer Breakfast Briefing Email

Start the working day with The Caterer’s free breakfast briefing email

Sign Up and manage your preferences below

Check mark icon
Thank you

You have successfully signed up for the Caterer Breakfast Briefing Email and will hear from us soon!

Jacobs Media Group is honoured to be the recipient of the 2020 Queen's Award for Enterprise.

The highest official awards for UK businesses since being established by royal warrant in 1965. Read more.


Ad Blocker detected

We have noticed you are using an adblocker and – although we support freedom of choice – we would like to ask you to enable ads on our site. They are an important revenue source which supports free access of our website's content, especially during the COVID-19 crisis.

trade tracker pixel tracking