(Alliance News) - Hostmore PLC on Tuesday said it agreed to combine with its own franchisor TGI Fridays Inc, while it posted a trading update in which it noted a decline in revenue due to lower demand.
Hostmore, the West Sussex, England-based owner of casual dining brand TGI Fridays said the deal has an enterprise value of GBP177 million. Under the agreement, Hostmore shareholders will own a 36% stake in the combined unit, with current shareholders in TGI Fridays holding the remainder.
TGI Fridays is currently owned by TriArtisan Capital Advisors LLC and MFP Partners LP. Because of the size of the stake in the combined company owned by TriArtisan and MFP, a waiver to rule 9 of the UK takeover code, which relates to mandatory offers, would be required for the transaction to complete. Completion is expected in the third-quarter.
The enlarged firm would be listed on London's Main Market.
TGI Fridays Chair Rohit Manocha said: "Our two companies share close ties and have a longstanding, excellent working relationship and mutual respect. A combined group would stand to gain from our focused efforts with the benefit of greater combined scale, efficiencies and flexibility.
"By joining forces with Hostmore, this would support our long-term organic growth strategy and enable us to better harness TGI Fridays' global franchising and licensing infrastructure. I look forward to the prospect of working with the teams at Hostmore as a part of a new ownership structure, to ensure we keep delivering 'That Fridays Feeling' that our guests across the world know and love."
Meanwhile, Hostmore said that revenue on a like-for-like basis fell by 7% in the first quarter of financial 2024, noting reduced consumer demand across the sector. However, it noted that guest sentiment scores improved after a renewed focus on guest experienced which started in financial 2023.
The company said in the first quarter, systemwide restaurant sales declined by 11% to GBP247 million from GBP278 million a year prior.
Hostmore expects to release its financial 2023 results by the end of this month.
Hostmore shares rose 5.5% to 18.99 pence each on Tuesday afternoon in London.
By Tom Budszus, Alliance News slot editor
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