Hospo group takeover pulled

NZX-listed Good Spirits Hospitality has shelved its $21.3 million takeover of The Nourish Group citing Covid-19 restrictions.

Good Spirits chairperson Duncan Makeig said the directors were ‘‘extremely disappointed’’. The deal fell over as potential investors were unable to travel to New Zealand and because of uncertainty around Covid-19 restrictions on hospitality in the future, he said.

The deal was announced last November when it was thought the local hospitality sector was through the worst impacts of Covid, he said. However that was before the outbreak of the Omicron variant, which led to ongoing restrictions on the hospitality sector. The acquisition would have doubled the number of hospitality venues owned by the group, given it better economies of scale and seen it expand beyond Auckland and Hamilton and into Wellington and Queenstown.

‘‘We were at an advanced stage with an investor who could see the strength in our growth strategy and approach,’’ Makeig said. ‘‘However, the possibility of future

Covid restrictions in the New Zealand hospitality sector proved too great a barrier for final agreement of terms being reached with the investors.’’

The deal would have brought the total number of venues owned by Good Spirits to 20, making it one of the biggest hospitality groups in the country.

Good Spirits posted a first-half loss of $2.9m in the six months to December 31, as its nine bars in Auckland and one in Hamilton were ‘‘hard hit’’ by Covid-19 restrictions. Its bars include The Fox, Botany Commons, Danny Doolans, Union Post, Cock & Bull,

O’Hagans, Citizen Park and The Cav. The acquisition of Nourish would have added the Soul Bar & Bistro, Talulah, The Chamberlain, The Brit, Andiamo, Shed 5, The Crab Shack (Wellington), Pravda Cafe´ and Grill, Jervois Steak House (Auckland and Queenstown) and Bistro Lago.

The deal would have cost Good Spirits $21.3m with up to an additional $5.9m payable 12 to 24 months after settlement based on venue outperformance. It spent $1.2m on advisory and due diligence in the first half.

A previous deal which would have seen Good Spirits acquire three Wellington bars for $3.4m fell over in April last year.

The bars, owned by Wellington publican Russel Scott, were The Featherston Tavern, Leuven Belgian Beer Cafe and the Avida Bar.

Makeig said the board would continue to focus on rebuilding the company’s revenue and profitability following two years of limited trading under Covid restrictions.

‘‘Early momentum gained under an orange setting is welcome and we will continue to look for opportunities to both expand and de-lever the business,’’ he said.