Activist investor plots bid for TRG's pub and leisure arms

An activist investor in the hospitality group behind Wagamama is reportedly considering a bid to break up the company.

 

The Telegraph reports TMR Capital, which has a 1.75% stake in the Restaurant Group (TRG), is looking to acquire two of TRG’s four divisions.

 

It is eyeing the Brunning & Price pub arm and the group’s historically loss-making leisure division, which includes the Frankie & Benny’s and Chiquito restaurant brands.

 

The two divisions make up more than 100 sites and would leave TRG with around 300 locations under Wagamama and its concessions business, which runs sites travel hubs.

 

TMR has approached the board and, although a price has reportedly not been discussed, City analysts told the Telegraph a “knockout” offer would be around £200m.

 

TRG said it was working with independent advisors to access its “strategic options” for the future.

 

The hospitality business has come under growing pressure from investors this year over its leadership, direction, and share price, which some shareholders have argued is below its true value.

 

Investors had previously called for TRG to sell off its pub and leisure arms, which were seen as a drag on the share price, to focus on growing the Wagamama brand.

 

Last week, TRG said it was on track to close around 35 restaurants in its leisure division by the end of the year and open seven to eight new Wagamama’s.

 

Although the leisure arm saw an overall 4% drop in like-for-like sales there was a 12% increase in the third quarter of this year.

 

A TRG spokesperson said: “TRG has enjoyed a very encouraging first half of the year outperforming the wider hospitality market. Highlights include Wagamama’s continued market out-performance and exceptionally strong trading from both our pubs and concessions businesses.

 

“We have made an excellent start executing our three-year margin improvement plan and continue to review our wider strategic options to further accelerate TRG’s deleveraging profile.”

 

Earlier this month, TRG dismissed calls by investor Irenic to dismiss its chairman Ken Hanna over claims he had showed a "disregard for the best interests of all shareholders".

 

TMR Capital has been contacted for comment.

 

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