-Fulham Shore agrees 14.15p per share cash takeover
-Deal struck at a 35% premium
-Continued UK and international expansion of brands
The owner of the Franco Manca and The Real Greek restaurant chains Fulham Shore (FUL:AIM) has agreed a cash offer from Japanese restaurant group Torridoll Holdings at 14.15p per share representing a 35% premium to the prior closing price sending the shares up 34% to 14p.
The acquisition values Fulham Shore at £93.4 million on a fully diluted basis. Torridol is listed on the Tokyo stock exchange with a market cap of £1.5 billion and generates around £1 billion of annual sales.
In conjunction with private equity partner Capdesia which focuses exclusively on the restaurant sector the two firms intend to bring their combined expertise and resources to grow Franco Manca and The Real Greek bands across the UK and internationally.
Following the completion of the acquisition Torridol intends to reduce its holding to 51% with the investors of Capdesia taking control of up to 49%.
Subject to the approval by 75% of shareholders the acquisition is expected to complete by the end of May 2023.
In the year to 27 March 2023 Fulham Shore increased sales by a fifth to around £100 million, a record high for the group, driven by 18 new store openings taking the number of sites to 97.
SERIAL RESTAURANTEUR STRIKES AGAIN
Investment director at AJ Bell Russ Mould commented: ‘Named after his father’s love of Fulham FC, David Page has scored yet again by attracting a takeover bid for his restaurant business, Fulham Shore.
‘For executive chairman Page, it’s the latest tick in the box for a career that has seen him build up a series of restaurant businesses and then sell them.
‘He was a key figure in the roll-out of Pizza Express which subsequently was bought by private equity firm TDR Capital, and then again with Gourmet Burger Kitchen which was acquired by Nando’s owner.
‘A good restaurateur spots a gap in the market, rolls out a proposition with a close eye on costs and getting good deals on leases, and then waits for it to build scale before selling the chain.
‘One might argue that the 14.15p takeout price for Fulham Shore doesn’t fully price in its potential. Eighteen months ago, it was trading close to 20p a share, after all.
‘But in an economically uncertain environment, the price on the table might seem reasonable given the circumstances and possibly the best deal that could emerge for some time.’
POSITIVE READ ACROSS FOR THE SECTOR
Shore Capital highlights the acquisition price would represent a 20% premium to the sector average which has a positive read across for the sector.
‘We sense this vote of confidence in the UK small cap restaurants segment alongside upbeat updates from peers on current trading could act as a catalyst to put valuations back on a positive trajectory towards their historic ranges.’
Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author of the article (Martin Gamble) and the editor of the article (Tom Sieber) own shares in AJ Bell.
