Private equity fund Apollo Global Management on Thursday said it had struck a deal to snap up struggling U.K. restaurant operator The Restaurant Group in a deal worth £701 million ($862 million).
Apollo agreed to buy the company for 65 pence a share, marking a 34% premium on the Wagamama-owner’s closing price on Oct. 11.
The company
RTN,
shares surged on news of the deal, rising 38% to 66.5 pence per share.
TRG is just the latest publicly-listed restaurant firm to go private following a slew of private equity-backed acquisitions, including those of Subway and Burger King, in recent years.
Apollo’s agreement to acquire TRG comes as the chain restaurant company has suffered a series of financial losses that saw it agree to offload its loss-making leisure business, which includes Frankie & Benny’s and Chiquito, to Cafe Rouge-owner Big Table Group last month.
Last month, TRG’s CEO Ken Hanna also announced he would be stepping down from his position due to “personal reasons,” following calls from activist investors for a shakeup of the firm’s board.
In a statement, Apollo said it plans to work with TRG’s existing management, as it argued the company will be “best served” by going private due to the access to capital and “long-term investment approach” that private-equity backing offers.
TRG’s board said it believes the certainty provided by Apollo’s cash deal poses a “superior outcome for TRG Shareholders” as it said the price offered by the U.S. private equity fund marks an “attractive premium” compared to its current share price.
The deal comes as TRG’s share price has suffered sharp losses in recent years that in February saw Hong Kong investor Oasis Management Company slam the firm for having “one of the worst performing share prices of any U.K. leisure company”.
Stock in the London-listed company, however, has continued to linger at prices that are more than 80% lower than at its 2015 peak and 69% lower than five years ago, in Oct. 2018.
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