Hospitality bosses and investment bankers are predicting a takeover deals bonanza this summer as pub and restaurant sales rebound sharply after the pandemic.
Mike Saul, head of hospitality and leisure at Barclays Corporate Banking, said he has around two dozen potential deals on the table, ranging from £10million to £250million, as investors race to inject millions into pandemic survivors set for rapid growth – or buy them outright.
Since the start of the year, Barclays has worked on the deal teams for ex-Greene King boss Rooney Anand’s £200million pub acquisition spree, and investment giant Blackstone’s multibillion takeover of Butlin’s owner Bourne Leisure.
Pub and restaurant sales have been rebounding sharply after the pandemic
Saul said private equity firms are now ‘running the rule’ over further businesses, ranging from pubs to betting shops, casinos, hotels and caravan parks. He said: ‘There is a general acquisitive atmosphere out there. Some people really want to try to grow quite quickly – they see opportunity coming out of recession.’
His prediction was echoed by an array of hospitality bosses, including Young’s pub boss Patrick Dardis and former Patisserie Valerie chairman Luke Johnson.
Last night, City takeover speculation focused on Franco Manca, the fast-growing sourdough pizza chain run by ex-Pizza Express boss David Page.
One industry source claimed 68-year-old Page is keen to find a buyer for the chain after building it up through his Aim-listed Fulham Shore restaurant group over the past six years.
Industry insiders said Franco Manca, which has 54 restaurants across the UK, could be a takeover target for The Restaurant Group, which owns Wagamama.
Andy Hornby, the former HBOS banker who runs The Restaurant Group, said earlier this year that he was looking to expand Wagamama and the group’s Brunning & Price gastropubs.
Industry insiders said Franco Manca could be a takeover target for The Restaurant Group
One source said: ‘Page would definitely sell, and The Restaurant Group are looking to buy something as well. It would make perfect sense to me.’
The Restaurant Group declined to comment and Page said no talks had taken place. ‘Nobody has made an approach to us,’ he told The Mail on Sunday.
However, he added: ‘I think there will be quite a lot of merger and acquisition activity in the sector. There is a lot of money out there chasing really good assets to help them expand. We hope the survivors who emerge fittest from the pandemic will command premium prices.’
Meanwhile, Dardis, chief executive of Young’s, is in the ‘early stages’ of selling his around 50 tenanted pubs and said further consolidation is ‘inevitable’.
Patrick Dardis, chief executive of Young’s, is in the ‘early stages’ of selling his 50 tenanted pubs
Before the pandemic, the pubs sector saw megadeals such as the £2.7billion takeover of Greene King by a Hong Kong fund backed by billionaire Li Ka-shing, and Dardis predicted a huge appetite for mergers and acquisitions over the next two years.
He said: ‘It’s going to be very busy, and when it does happen it will be a very interesting space to be in. The word is: watch this space.’
Entrepreneur Luke Johnson put his Gail’s Bakery chain on the market this month and hopes to agree a sale by the autumn. ‘We have had some calls and we are keeping our options open,’ Johnson said. ‘We are pretty confident that some kind of transaction will happen.’
Page spent last Friday in Manchester looking at new sites for Franco Manca and its sister chain, The Real Greek. He plans to open 45 restaurants between this year and 2023, spending a total of £22.5million on new sites.
He said he had ‘deja vu’ from 26 years ago, when he built up Pizza Express after the 1990s recession. ‘The climate is the same,’ he said. ‘Cut-price sites and lots of opportunities from firms that have closed sites through company voluntary arrangements or administration.’
Page has also been approached in recent weeks by two venture capital investors who are each raising between £10million and £20million to invest in pubs and restaurants.
He said he is considering investing six-figure sums in the cash shells, which plan to list on the stock exchange within two years.
‘Three or four years ago, I would have put them [the investment proposals] in the bin,’ he said. ‘But now I can see there are opportunities.’
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