Leading analyst Simon French, of Cenkos, has said he expects further M&A activity in the sector over the coming months, following the acquisition of Cote by BC Partners.
He said the acquisition also signals another new entrant into the casual dining market with BC joining Apollo, Bridgepoint and TPG as recent acquirers of Casual Dining Group, The Azzurri Group and Prezzo respectively.
He said the estimated £250m price tag for Cote signals that the Restaurant Group is under-valued at EV/EBITDA of 11.3x. He said the Cote deal implies a historic (to July 2014) EV/EBITDA multiple of 15.3x and based on current trading run-rates we estimate that the current year (to July 2015) EV/EBITDA multiple paid was in excess of 12.0x”
On the market outlook, he said: “We continue to expect more activity in the space over the coming months with multiples likely to move higher still as demand for restaurant assets outstrips supply, ironically a reverse of the trading situation where supply is outstripping demand.”