PizzaExpress owner Wheel Topco backs out of bid for Apollo target Wagamama

Shares in Wagamama owner The Restaurant Group fell 3% on Tuesday after PizzaExpress owner Wheel Topco scuppered hopes it might submit a bid that would rival the £701m offer put forward by private equity fund Apollo Global Management.

In a statement posted on the London Stock Exchange, Wheel Topco announced that “due to market conditions, it does not intend to make an offer for TRG,” after it previously requested due diligence information from the pub and restaurant owner in October.

Counter offer hopes

Wheel Topco’s request for due diligence information had raised hopes the PizzaExpress-owner might submit a counter offer for TRG, after US private equity firm Apollo struck a deal with TRG’s board to buy the restaurateur for £701m in October.

The PizzaExpress-owner was subsequently revealed to have hired bankers from Goldman Sachs to help it draw up plans to buy a sizable stake in TRG, according to Sky News.

Analysts at Stifel had previously suggested Apollo’s “unsolicited” offer to buy out TRG for 65p a share could flush out a rival bid for the London-listed firm. Shares in TRG had stayed just above rates of 65p per share since news of Apollo’s offer.

Now, TRG’s share price has dipped back below the 65p per share mark, following Wheel Topco’s announcement that it has abandoned any plans to submit a bid for the restaurant company which has suffered a series of financial losses in recent years.

Recommend Apollo offer

TRG’s board previously said it would recommend investors accept Apollo’s offer, which requires support from 75% of shareholders. The company’s management had said TRG would be best served by an Apollo takeover due to the “long-term investment approach” going private offers.

First set up in 1987, TRG has grown rapidly over the past three decades through a series of high-profile acquisitions that have seen it snap up major UK restaurant chains, including Chiquito in 1989, Frankie & Benny’s in 1995, Brunning & Price in 2007 and Wagamama in 2018.

TRG subsequently agreed to offload its loss-making leisure arm, which includes Chiquito and Frankie & Benny’s, to Cafe Rouge owner The Big Table Group for £7.5m in September. Company CEO Ken Hanna exited the firm the same month, citing personal reasons.

PizzaExpress is owned by a consortium of funds including Bain Capital Credit, Cyrus Capital Partners and HIG Bayside Capital who took control of the company from Chinese private equity firm Hony Capital in 2020.

From Marketwatch

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