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Vote of the shareholders of the Restaurant Group on the acquisition of Wagamama
We have all had a disappointing "casual meal" experience: food is coming at the wrong time, there is a dispute over the bill, no one feels satisfied and everyone wants to order a takeaway – as expected at originally.
This morning, at 9:30 am, the shareholders of Restaurant Group have to decide if they can support such an experience.
That is when they will vote on the company's proposed buyout of the Asian restaurant chain Wagamama for £ 559m, including its debt – financed by a substantially reduced rights issue of 315 M £.
Restaurant Group, which owns Frankie & Benny's and Chiquito stores, says the price is justified by Wagamama's faster growth rate and the cost savings that will come from the combination of activities.
However, several shareholders have expressed concern – or disapproval – about this idea, saying the timing is awful for a mainstream company to take on more debt, its price is too high, that its financing plan involves a reduction dividend and that acquisitions have been made. is never part of the group's turnaround plan.
Columbia Threadneedle Investments, for example, which owns 7.7% of the Restaurant group, said it could not subscribe to the proposal because of the high value and the economic context.
Key figures:
- £ 357m in cash to pay, plus Wagamama's debt
- Issuance of 13 rights out of 9 at 108.5bp per share to raise £ 315m
- Implied dividend reduction based on a plan to make the payment twice covered by profits
- £ 22 million in revenue and expected costs
What was said: Restaurant CEO Andy McCue said the agreement was potentially "transformative" and would bring growth and a gain of £ 22 million in revenues and costs to the group.
The shareholder advisory group, Glbad Lewis, said: "We believe that the proposed transaction and the increase in related rights are generally reasonable and in the best interests of shareholders," and that the savings of costs "seem achievable".
James Thorne, Fund Manager at Columbia Threadneedle, said: "The strategic appeal of combining two good companies is perhaps understandable, but the size and price of the operation at this stage of the cycle give rise to too much red flags.
As the city was waiting for it? Nobody really knows what to expect. Several of Restaurant Group's biggest investors said they would vote against Wagamama, but it has not yet been determined whether they have enough votes to block it. Shareholder resolutions to approve the transaction and the issuance of rights require a simple majority of voters – abstentions do not count as votes for or against.
Verdict of OQ: The purchase of Wagamama would definitely accelerate the growth of Restaurant Group and offer much more international expansion opportunities than Frankie and Benny. But it's impossible to see how late 201 is a good time to pay for what the market sees as a staggering price and to further indebt, for even more visibility in the UK's casual dining sector. . And remember, Wagamama is sold by two private equity groups thrilled to come out. . .
Unilever in exclusive negotiations for the purchase of a Horlicks unit from GSK
Realizing a right by using something means, in modern language, ruining everything. But Unilever and millions of malted drink fans in India would arguably disagree.
This morning, it appeared that the group of consumer goods Anglo-Dutch had entered into exclusive negotiations with GlaxoSmithKline for the acquisition of its $ 4 billion nutrition business, which includes the Horlicks brand, which remains extremely popular on the subcontinent.
Unilever's bid price could not be determined, but GSK's Indian company is listed on the Bombay Stock Exchange with a market value of $ 4.2 billion. This would mean that GSK's 72.5% stake in the company represents approximately $ 3 billion with no acquisition premium. The agreement should also include GSK's activities in Bangladesh.
Apparently, Unilever defeated the Swiss food group Nestlé, which sought to strengthen its leading position in the hot beverage powder market. Coca-Cola was also selected to participate in the company's last auction, which began in September, according to a person familiar with the process.
GSK sells the Horlicks unit because its priorities have been changed under Emma Walmsley, general manager. It recently completed a $ 13 billion acquisition of Novartis 'interest in the two companies' joint venture in consumer health.
Key figures:
- $ 4.2 billion – the market value of the Indian company of GSK on the Bombay Stock Exchange
- $ 3 billion, the value of the 72.5% that GSK holds in Indian trade
What was said? Unilever and GSK have not commented. But last month, Andrew Wood, a Bernstein badyst, said Unilever's desire to strengthen its home and personal care division would not prevent the acquisition of mid-size food in a key emerging market.
Verdict of OQ: In the UK, Horlicks may be a joke. It is considered a sleeping drink, widely consumed by people still living in the 1950s. However, it accounts for about 44% of the Indian food beverage market, which is still considered a nutritional supplement beneficial to children.
Thus, if an agreement were finalized, Unilever would strengthen its position in India, its largest emerging market. And this Indian market is only one-fifth the size of China despite a population almost as large, which suggests a huge potential.
Today's Lombard column focuses on Thomas Cook's second profit warning:
Climate change has a lot to answer. In addition to the ecological damage, the high temperatures this summer have infested British caravan routes, turned Norfolk into an outdoor park overrun by the remaining dog owners (so there is not much change there) and postponed the the average date on which Glasgow men report -aff "(ie tops the ranking) of several flesh-flickering weeks (for the latest guidelines, see www.taps-aff.co.uk). But what can not be blamed for the heat wave is Thomas Cook's second profit warning in the space of two months.
Read the rest of the Lombard column today.
FT Opening Quote, commented by Matthew Vincent, is your first briefing on Square Mile. You can receive it by email every morning at 8 am by registering here.
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