Struggle on the menu over Wagamama bid
RESTAURANT Group, the owner of Frankie & Benny’s and Garfunkel’s, believes it will see off a potential shareholder rebellion and win backing for its £357million takeover of Wagamama on Wednesday.
The firm’s third largest shareholder, Columbia Threadneedle Investments, which has 8.1 per cent of the voting rights, opposes the deal, as do some smaller investment groups such as Vivaldi Asset Management.
Opponents of the noodle bar deal believe that the timing of the takeover is wrong, given the struggles in the casual dining sector. They fear it will destroy shareholder value and is too big, too costly and involves taking on too much debt.
So far three of its top 10 shareholders, Royal London Asset Management, JO Hambro Capital Management and an unnamed group, have pledged to back the deal. Together it is thought they account for around 15 per cent of the voting rights and Restaurant Group is confident that it has enough support overall to win the simple majority vote.
Since the deal was announced on October 30, Restaurant Group’s shares have lost close to 21 per cent of their value. On Friday night they closed at 234.8p.
To finance the purchase of Wagamama from its private equity owner Duke Street, Restaurant Group will tap investors for £315million by selling them new shares. It will also borrow money from Royal
Bank of Canada.