Controlling Kaye family set to make £170m if deal to sell to US group TPG goes ahead
Restaurant chain Prezzo has agreed to a £304m takeover offer from US private equity firm TPG, but a number of City analysts are saying the price is not enough.
TPG, which has invested in the likes of Del Monte and Burger King, is offering 126.5p a share in cash and saw off buyout firm Advent to win the boards approval.
Since the business was founded in 2000, the Kaye family and management have built Prezzo into a successful UK casual dining business with 249 restaurants. To continue to maximize the growth of the business, the Board has concluded that new skills, infrastructure and investment will be required and we are pleased to recommend the Bidco offer, which is in the interest of all shareholders.
In our opinion, the agreed bid of 126.5p fundamentally undervalues a business with an impressive track record and exciting prospects. We appreciate the risks of the family exiting and TPG have been very cute and picked up a good business at an attractive price. However, independent shareholders should be disappointed at the exit price and... they should reject the bid.
Prezzos board has agreed to and recommended a 126.5p a share cash offer from TPG, which values the company at 8.6 times December 2014 estimated profits. This compares to The Restaurant Groups 11.6 times enterprise value/EBITDA valuation. In our view, the shares should de-list, but not at this price.
We expect many of [the non-family/director] shareholders to conclude that this cash offer does not fully reflect the value and future prospects of the business.
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