Activist Investor increasing stake6 Jun 2016 08:19
Garfunkel’s owner on the menu for activist investor
Oliver Shah
June 5 2016, 12:01am, The Sunday Times
An activist investor is building a stake in The Restaurant Group, owner of eateries such as Frankie & Benny’s and Garfunkel’s.
Crystal Amber, whose past targets have included Pinewood film studio and the chocolatier Thorntons, has bought about 1% of the FTSE 250 company — below the 3% threshold at which shareholdings must be disclosed to the market. It could take as much as 5%, sources said.
The activist’s swoop comes after a near-halving of The Restaurant Group’s share price since the start of the year amid a trio of profit warnings.
The slump, against a background of growing competition in the sector and the falling popularity of retail parks due to online shopping’s advance, has fuelled takeover speculation. Private equity firms linked to bid interest in The Restaurant Group include Cinven, the former owner of Pizza Express, and TA Associates, which has a stake in the fashion and home furnishings company Cath Kidston. A source close to the situation said the company would also make a natural target for Whitbread, the FTSE 100 parent company of Costa Coffee and Premier Inn.
Crystal Amber is known for agitating for deals in many of its holdings. A source close to the fund said there would be “huge cost synergies” if The Restaurant Group was combined with another operator. He added: “It’s got a share register with growth investors, and it’s no longer growing.”
The fund’s intervention is likely to crank up the pressure on Danny Breithaupt, who has been chief executive since September 2014. Debbie Hewitt, who made her name as the managing director of
RAC, joined as chairwoman last month and has already started to shake up the board.
Stephen Critoph, the finance director, was ousted in April on the day of the third profit warning.
A source close to the company said the old board had been “asleep at the wheel” and suggested that Hewitt’s desire for change would align her with Crystal Amber.
Shares in The Restaurant Group closed at 357.5p on Friday, valuing it at £720m.