The Restaurant Group (TRG) has announced plans to buy the entire issued share capital of Mabel Topco Limited, parent company of wagamama, for a cash payment of £357m, with an enterprise value of £559m.
This implies a multiple of 8.7x wagamama year-end August 2018 EBITDA after pre-opening costs (£42.5m), including cost and site conversion synergies (£15m and £7m respectively).
TRG, which owns brands such as Frankie & Benny’s, Chiquito and Coast to Coast, plans to convert a number of its current sites to wagamama.
The company will also look to expand wagamama UK concessions, delivery opportunities, pan-Asian food-to-go offerings, and explore international growth options enabled by wagamama’s established international presence.
TRG’s current trading update reported a total sales drop of 0.5% after 42 weeks in 2018. Like-for-like sales were down 2.2%. Like-for-like sales were up 1.4% in the 14 week period following the end of the World Cup.
“This transaction is an exciting and transformative opportunity to create a business which can pursue a truly multi-pronged growth strategy and create substantial value for our shareholders,” says TRG CEO Andy McCue.
“Wagamama is a fantastic brand, with a market leading pan-Asian proposition, which has consistently outperformed the casual dining market in recent years. Central to this success has been a cohesive culture and clear brand values which are focused on making the right choices for customers.
“The transaction not only gives us a great brand but also creates a business with a multi-pronged growth strategy which will enhance earnings with continued selective UK rollout, accelerated via conversions of some TRG sites; by further leveraging the brand in Concessions both in the UK and internationally; by maximising the opportunities presented by the rapidly growing delivery sector; and by optimising the potential within international markets.”