Despite the existence of an existing ready-to-seal deal, the group behind renowned British restaurant chain PizzaExpress is contemplating a rival bid for Wagamama owner The Restaurant Group (TRG).
This development comes just weeks after the private equity heavyweight Apollo Global Management made an offer to take TRG private.
TRG confirmed it had received a request for due diligence information from Wheel Topco, the company behind PizzaExpress, earlier today.
Currently, Wheel Topco is under the ownership of US debt funds including Cyrus Capital Partners and Bain Capital Credit.
The preliminary discussions involving PizzaExpress come shortly after TRG’s board approved an all-cash offer from Apollo, valuing the group at 65p per share, with an equity value of £506 million ($612 million).
Accounting for debt, this deal carries an enterprise value of £701 million ($848 million).
Apollo’s supposed acquisition of TRG marked the culmination of a lengthy campaign, led by Hong Kong-based fund Oasis Management, aiming to bring about a transformation within TRG, which not only owns Wagamama but also the pub chain Brunning & Price.
Oasis Management, TRG’s largest shareholder (with a 17.8% stake), had previously committed to an “irrevocable undertaking” to support the Apollo deal.
That said, this commitment is contingent upon no rival bid exceeding the original offer price by more than 10%.
Wagamama is being considered by both Apollo and TRG
TRG’s board has addressed the recent developments, stating its willingness to provide due diligence to PizzaExpress, and consider the terms of any prospective bid.
Nonetheless, the group emphasized that there is uncertainty surrounding the likelihood of an offer from Wheel Topco and the terms on which such an offer might be extended.
PizzaExpress’s extensive footprint in the UK and Ireland, where it operates 370 sites, make it a strategic entry into a potential bidding war.
Allan Leighton, the Chairman of PizzaExpress since 2020, also has a significant history with Wagamama.
He served as the Chairman of Wagamama when it was under the ownership of private equity firm Duke Street Capital, andeplayed a pivotal role in the sale of Wagamama to TRG in 2018.
Following this transaction, Leighton assumed a non-executive position on TRG’s board.
As of the most recent market close on Wednesday, TRG’s share price stood at 66.5p, surpassing the initial offer price from Apollo.