US private equity firm Apollo Global Management (APO) has reached an agreement to purchase The Restaurant Group, the owner of Wagamama, for £506 million. The acquisition comes after an extended activist campaign for a restructuring of the dining operator. Under the deal terms, Apollo will pay 65p per share in cash, representing a premium of approximately 34% over the stock's last closing price.
The completion of the deal, anticipated in early 2024, will require 75% shareholder approval. Amid concerns regarding the challenging macroeconomic environment, TRG's board, led by departing chair Ken Hanna, plans to unanimously recommend the offer to shareholders. The acquisition signals private equity's ongoing interest in the hospitality and leisure sector, with Apollo demonstrating previous engagement in the restaurant and entertainment industry in North America.
Moreover, the transaction underscores Apollo's commitment to supporting TRG's management strategy to reduce the company's net debt and enhance margins. The purchase price implies an enterprise value of £701 million for TRG, valuing the company at a multiple of around nine times adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA).
Alongside the recent announcement, the acquisition reaffirms Apollo's pursuit of publicly traded UK companies, with past attempts including discussions with THG and a pursuit of Wood Group earlier this year. Investment Disclaimer: This content is for informational purposes only and does not constitute financial advice or an offer to buy or sell any securities. Investors are advised to conduct their research and seek professional guidance before making any investment decisions.