Loungers takeover met with shareholder resistance

Two of Loungers’ biggest shareholders are expected to vote against Fortress Investment Group’s proposed takeover of the café-bar group.

 

The US private equity firm revealed plans to acquire the owner of the Cosy Club, Lounge and Brightside (pictured) brands in a £338m deal yesterday (28 November), offering 310p per share, a cash offer price that is above the highest-ever closing price for Loungers shares.

 

However, Mark Slater, whose firm Slater Investments owns a 10.4% stake in the casual dining chain, told The Times he will reject the takeover, stating: “It’s the wrong time to be trying to sell a very good business of this kind.”

 

Dan Harlow, head of UK equity at AXA Investment Managers, also told The Times his company intends to vote against the deal.

 

It comes as Canaccord Genuity Asset Management expressed its intention to vote in favour of the acquisition earlier today (29 November).

 

The firm holds a 1.7% share in Loungers, meaning the proposed acquisition is currently backed by 41.9% of shareholders.

 

Domnall Tait, managing director of Fortress – which also owns Punch Pubs & Co., Majestic Wines and Vagabond in the UK – said: “Fortress is pleased to present this offer for Loungers, a company we believe holds a strong and differentiated position in its industry.

 

“Loungers’ directors have delivered impressive increases in the number of locations, same-store sales and revenues over the past several years – in spite of the recent challenges faced by the wider hospitality sector. This growth, and management’s continued commitment to the business, give us confidence in the company’s growth potential and in the opportunity to increase value.”

 

Speaking at the Casual Dining Show in September, Justin Carter, group managing director of Loungers, said the company is looking at an additional 35 sites in the new year, which would bring its total portfolio “through the 300 mark”.