The Restaurant Group looks to raise £315m to fund Wagamama deal

By Sophie Witts contact

- Last updated on GMT

The Restaurant Group looks to raise £315m to fund Wagamama deal

Related tags: Restaurant, Finance, Casual dining

The Restaurant Group (TRG) is planning to raise £315m through a rights issue to fund its acquisition of the Wagamama casual dining chain, despite facing criticism from shareholders and analysts.

TRG, which owns brands including Chiquito and Frankie & Benny’s, is seeking to raise cash for the takeover bid​ - which values Wagamama at £559m.

It will issue 290.4m new ordinary shares in a 13 for nine rights issue priced at 108.5p.

"This a transformative deal which accelerates our growth strategy and adds a differentiated, high growth brand to our portfolio,” says Andy McCue, TRG CEO.

He adds that the transaction will benefit ‘both businesses’, but TRG has faced criticism over the weekend for appearing to neglect its core brands, which are struggling in the current high street climate.

TRG says its total sales in 2018 so far are down 0.5% compared to the previous year, while like for likes are down 2.2%.

In contrast Wagamama’s like for like sales have risen 12.2% in the 11 weeks to 4 November 2018.

One shareholder told The Daily Telegraph​: “We would be more interested if [TRG] first turned around their legacy business properly.”

Analyst Wayne Brown of Liberum added: “This is like putting a new roof on a building, but the plumbing has not been fixed and the building needs a paint job.”

TRG shareholders will vote on the takeover bid on 28 November.

Related topics: Business & Legislation, Casual Dining

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