Hostmore abandons plans to acquire TGI Fridays

Hostmore has dropped plans to acquire TGI Fridays after facing legal issues.

In April this year, the parent company of TGI Fridays in the UK had initially agreed to the proposed all-share acquisition of the American-themed casual dining brand for £177m.

The terms of the sale would have valued TGI Fridays at approximately 5.4 times its FY23 underlying earnings before interest, taxes, depreciation and amortisation, which Hostmore said was “highly attractive”.

However, as a result of TGI Fridays losing control of TGIF Funding, which holds the legal title to the franchise agreement royalties, Hostmore said an acquisition at this stage would “impair the future revenue of the business”.

Hostmore posted in an update: “The predictable and highly cash generative royalty stream of TGI Fridays was the primary attractive feature for the group in pursuing the acquisition. Following the termination, the acquisition is no longer being actively pursued.”

However, it was implied that both parties remain open to re-engaging discussions “if circumstances warrant”.

Last month, Hostmore revealed plans to move TGI Friday’s to a fully franchised model if its reverse takeover of the US casual dining chain went ahead.

The group has since announced the process has reached an “advanced stage” after several formal bids were received.

It added the sale of its corporate stores is due to be completed later this month.

The group’s year-to-date like-for-like sales remain at a decline of 12% compared to the same period in 2023.

Hostmore is a London-listed hospitality group that runs 87 TGIs restaurants in the UK as its largest franchisee.