Wagamama deal is getting spicy for Restaurant Group

THE food fight at Restaurant Group comes to a head this week as shareholders get the chance to vote on its takeover of Wagamama.

The embattled company, which owns Frankie & Benny’s and Garfunkel’s, has divided opinion over its drastic plan to spend £559million on buying the Asian food chain.

Major investors such as Columbia Threadneedle, which has an 8 per cent stake, have come out and publicly opposed the deal, expressing concerns about the high price and Restaurant Group’s debt levels.

They feel the company should address its own problems, such as getting more bums on seats in its own eateries, before going out and spending big on another chain.

Others such as Schroders and Royal London Asset Management have come out in support of the deal.

The takeover will be funded by a £315million rights issue at a steep discount to Restaurant Group’s share price.

It closed at £2.35p on Friday.

If the deal goes through at Wednesday’s vote, expect the shares, which have lost two-thirds of their value since 2015, to come further off the boil. THIS year has been anything but a holiday for Thomas Cook shareholders. It was capped off in September by a second profit warning in two months as chief financial officer Bill Scott headed for the exit, just eight months into the role.

The full-year results on Thursday will shed light on whether business has improved since then. UBS scribblers say that after two profit warnings, now might be a good time for chief executive Peter Fankhauser to unveil plans to cut more costs which, they suggest, could include some of its high street shops.

However, City sources say that’s unlikely. MARKS & Spencer may have defied the sceptics earlier this month when it reported a rise in firsthalf profits. wBut the cloud over the former high street bellwether has not yet passed.

There are still fears the dividend is under threat. Tony Shiret, a veteran retail analyst who works for brokers Whitman Howard, has told clients the dividend is ‘becoming increasingly vulnerable’ as profits continue to slide.

‘Forecasts are getting into the zone where the dividend must be under question,’ he said.

Could a poor Christmas spell the end of bumper payouts for loyal M&S shareholders?