The US private equity firm hoping to acquire Bristol-based café/bar chain Loungers has made an ‘increased and final offer’ for the highly successful group after a number of shareholders threatened to vote against its initial £338m bid.
Fortress Investment Group’s all-cash offer was accepted by Loungers’ board and a number of major investors in the business when it was announced at the end of November.
However, at least two institutional shareholders said they were opposed to the 310p-a-share bid – a 30.3% premium on the previous day’s closing price and planned to reject it.
Fortress, which owns Majestic Wines and Poundstretcher and recently acquired the Curzon cinema chain, has now upped its offer by just under 5% to 325p a share.
The move increases the value put on Loungers by Fortress to £355.4m.
Loungers was launched with a single café on North Street, Bedminster, 22 years ago by a group of Bristol restaurateurs-turned-entrepreneurs.
It has since built a chain of 230 Lounges – all more or less based on its first one – as well as 35 Cosy Clubs, which tend to be based in larger, city and town-centre buildings.
It has also opened four Brightside roadside restaurants and has a long-term plan to have a total of 600-plus outlets.
Loungers chairman Alex Reilley said: “We are very pleased that Fortress has decided to increase its offer, making it even more compelling for Loungers shareholders and reinforcing the loungers directors’ recommendation that they should vote in favour of the acquisition.”
Fortress managing director Domnall Tait said the increased offer reflected the group’s continued belief in the business and its management team.
“We look forward to supporting them through the next stage of growth. Notwithstanding the recent challenges, Fortress remains a strong believer in the UK,” he added.
Loungers has said Mr Reilley and CEO Nick Collins would find their positions untenable if they approach was rejected by shareholders.
However, media reports have suggested at least one investor remains unhappy, despite the increased offer.
Downing Fund Managers, which has a 1.56% stake in Loungers, has said it continued to undervalue the business, adding that an offer in the region of 360p to 380p would better reflect its prospects.
Shareholders will vote on the offer on 30 January.
