Sour takeover at Wagamama
SHARES in Restaurant Group fell to a near nine-year low yesterday as it won approval for a takeover of Wagamama despite a shareholder backlash.
Nearly 40 per cent of investors voted against the £559million deal, while 60.4 per cent gave their support, above the simple majority needed for it to succeed.
Critics had baulked at the price and the scale of a discounted £315million fundraising, as well as raising concerns over the Frankie & Benny’s and Garfunkel’s operator taking on about £200million of debt.
They argued it should have focused on continuing its turnaround of the existing business, whose premium prices and menu changes under previous management had proved a turn-off with customers.
Shareholder group Pensions and Investment Research Consultants warned on the eve of the general meeting: “The board has not adequately addressed the risks associated with such a high level of debt.
“In spite of board assurances of the potential profitability of this endeavour, the risks and adverse implications for shareholders appear too great to overlook.”
Restaurant Group argued that buying the near-200 Asian-themed chain, which opened its first restaurant in London in 1992 and has outperformed rivals in the casual dining market, was a “transformative” opportunity.
Restaurant Group chairman Debbie Hewitt said: “We have engaged extensively with investors throughout this transaction and very much appreciate the time all have given.
“We are pleased that the majority of our shareholders have approved the acquisition and the associated rights issue and we would like to thank them for the support they have shown.
“We are confident that the deal will create significant long-term value. It creates a raft of new opportunities for us to capitalise on in the months and years ahead.
“We look forward to welcoming the Wagamama team into the business post completion and thank them alongside all our of Restaurant Group colleagues for keeping focused on delivering for our customers.”
Restaurant Group shares fell 35½p to 199½p and have lost a third of their value since the proposed acquisition was announced a month ago.