Wagamama’s proposed sale to The Restaurant Group (TRG) will go ahead after shareholders voted in favour today, 28 November. The £559 million deal had been under scrutiny from prominent shareholders at the group, which owns high street restaurant chains Garfunkel’s, Frankie and Benny’s, and Chiquito.
Shareholders voted 60-40 in favour of the acquisition, according to Big Hospitality. There had been particular concerns over both the deal’s mechanics — including the assumption of £202 million in debt — and the fundraising methods required, with a £315 million rights issue covering the vast majority of the capital required. Raising this capital requires shareholders to buy ‘new’ shares at a discounted price, which results in a dividend cut and at least temporary dilution in shareholder value.
Wagamama — outperforming a casual dining market that has otherwise tanked in recent months — is still subject to the growing going concern over restaurant investments at large. With Jamie’s Italian, Byron, Gourmet Burger Kitchen, Prezzo, Gaucho, and Carluccio’s all closing restaurants and completing restructuring deals in recent months, investors are particularly cautious. Moreover, while Wagamama’s like for like sales are up 12.2 percent in the last 11 weeks, The Restaurant Group’s share value has plummeted 30 percent since announcing the deal. This narrow victory is another illustration of how the high street restaurant bubble is at least deflating, if not quite bursting.