Wagamama Owner Faces Setback as Wheel Topco Declines Bid

Shares in The Restaurant Group, the parent company of popular chain Wagamama, dropped by 3% on Tuesday as hopes of a bidding war were dashed. PizzaExpress owner Wheel Topco announced that it will not be submitting a counter offer to rival the £701 million ($862 million) bid made by private equity fund Apollo Global Management.

In October, Wheel Topco’s request for due diligence information from The Restaurant Group had initially sparked speculation that a competing offer might be forthcoming. However, the statement released on the London Stock Exchange confirmed that due to current market conditions, Wheel Topco has decided against pursuing an offer for TRG.

Following the announcement, it was revealed that PizzaExpress had enlisted the help of investment banking firm Goldman Sachs to explore options for acquiring a significant stake in TRG, according to Sky News.

Financial analysts at Stifel had previously suggested that Apollo’s unsolicited offer of 65p per share to acquire TRG could potentially attract rival bids. Despite this, TRG’s share prices had remained just above the proposed rate since news of Apollo’s offer became public.

TRG’s Share Price Drops as Wheel Topco Abandons Bid

The share price of TRG (Ticker: RTN, -3.02%) has once again fallen below the 65p per share mark. This comes after Wheel Topco announced that it has decided against submitting a bid for the restaurant company. TRG has been experiencing a series of financial losses in recent years.

Earlier, TRG’s board had stated that it would recommend investors to accept Apollo’s offer. This offer requires support from 75% of shareholders. The management of TRG believes that an Apollo takeover would be the best course of action due to its long-term investment approach.

Established in 1987, TRG has seen significant growth over the past three decades. This growth was fueled by a number of high-profile acquisitions, including popular U.K. restaurant chains such as Chiquito (1989), Frankie & Benny’s (1995), Brunning & Price (2007), and Wagamama (2018).

In September, TRG made the decision to sell its loss-making leisure arm, which includes Chiquito and Frankie & Benny’s. The buyer was The Big Table Group, the owner of Cafe Rouge, for £7.5 million. Around the same time, the company’s CEO, Ken Hanna, left the firm for personal reasons.

It is worth noting that PizzaExpress is currently owned by a consortium of funds, including Bain Capital Credit, Cyrus Capital Partners, and HIG Bayside Capital. They acquired control of the company from Chinese private equity firm Hony Capital in 2020.

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