Restaurant Group’s proposed takeover of Wagamama has been given the go-ahead. However, 40% of shareholders voted against the controversial deal, which values the noodle bar’s outlets at about £4m each.
The £559m deal – including Wagamama’s debt – was approved by 60% of shareholders who voted at a general meeting held by the group, which includes the Frankie & Benny’s and Garfunkel’s chains. Shares in Restaurant Group were down 13% at 205p after the deal was approved.
Restaurant Group hopes its portfolio will be revived by Wagamama, which has nearly 200 restaurants, including 133 in the UK. Wagamama has outperformed rivals in the UK’s casual dining market, where some chains have closed outlets amid rising costs and waning consumer demand.
Restaurant Group’s management faced significant shareholder opposition to the takeover amid concerns the price was too high.
Mark Brumby, an analyst at Langton Capital, has calculated Restaurant Group is paying the equivalent of £4m per leasehold restaurant.
On Tuesday, Pensions and Investment Research Consultants (Pirc), an influential shareholder group, urged investors to vote against the deal, arguing the “risks and adverse implications for shareholders appear too great to overlook”.
Shareholders opposed to the deal have warned that it was not a good time to take on additional debt because of the tough consumer backdrop in the UK.
Pirc said it was also concerned by the dilution of shares that would result from a deeply discounted £315m rights issue to help fund the takeover. At the meeting on Wednesday, 40% of shareholders voted against the rights issue, meaning the resolution passed with the support of 60% of those who voted.
Commenting after the vote, the chair of Restaurant Group Debbie Hewitt, said: “We have engaged extensively with investors throughout this transaction and very much appreciate the time all have given. We are pleased that the majority of our shareholders have approved the acquisition and the associated rights issue, and we would like to thank them for the support they have shown. We are confident the deal will create significant long-term value.
“The acquisition of Wagamama creates a raft of new opportunities for us to capitalise on in the months and years ahead. We look forward to welcoming the Wagamama team into the business post-completion and thank them alongside all of our Restaurant Group colleagues for keeping focused on delivering for our customers.”
