Loungers PLC has agreed to the terms and conditions of a takeover by Fortress Investment Group, alongside reporting strong half-year results that underline the cafe and bar operator’s ‘steady growth and market resilience’.
The Loungers board has backed an offer from Fortress Investment Group which values the bar group at £338m.
Fortress will offer 310p per share, which is a 30 per cent premium to Loungers’ closing price yesterday and above its highest ever trading price.
Loungers, based in Bristol, England, operates the Lounge, Cosy Club, and Brightside brands across 258 nationwide.
Commenting on the Acquisition, Alex Reilley, the Chairman of Loungers, said:
“We remain very confident about Loungers’ future prospects and the half year results that we announced separately today clearly demonstrate the strong momentum that we have in the business.”
“Loungers has come a long way since we opened our first site in Bristol in 2002, and we are hugely proud of the jobs we’ve created, the positive impact we’ve made on the UK’s high streets, and the outstanding hospitality our amazing teams have provided since then.”
“We are more ambitious than ever and we see Fortress as being an ideal partner to help us take Loungers into the next phase of its growth journey. We believe that the Acquisition represents a compelling proposition for all of our stakeholders and will allow us to execute our ambitious growth plans even more decisively and effectively.”
Commenting on the Acquisition, Domnall Tait, Managing Director at Fortress said:
“Fortress is pleased to present this offer for Loungers, a company we believe holds a strong and differentiated position in its industry. Loungers’ Directors have delivered impressive increases in the number of locations, same-store sales and revenues over the past several years – in spite of the recent challenges faced by the wider hospitality sector. This growth, and management’s continued commitment to the business, give us confidence in the company’s growth potential and in the opportunity to increase value.”
”Fortress brings to the table a successful track record of investing in consumer-focused businesses across the globe, particularly in the UK. For example, Fortress’ investment in Majestic Wines and Punch Pubs & Co. has helped drive the growth of each of those companies. Today’s announcement further strengthens Fortress’ commitment to the UK market, and to being a responsible steward of and investor in UK businesses.
Fortress has a high conviction in the future of experience-led retail and hospitality, and believes this is highly complementary to Loungers’ business model, strong operational performance, and impressive management team. Fortress looks forward to partnering with Loungers’ management and to providing them with support to drive the business through its next stage of growth.”
Separately, Loungers released its half-year results for the 24 weeks to October 6, showcasing strong financial performance.
Pretax profit surged 51% year-on-year to £6.0 million from £3.9 million, as revenue climbed 19% to £178.3 million from £149.6 million.
The company said trading continued to go well into the third quarter, with like-for-like sales growing 3.9% over the seven weeks to November 24 despite disruptions caused by Storm Bert.
Loungers opened 17 new sites in the period and remains on track to open 35 new sites for the full year, bringing its total estate to 292 locations.
