Bank Restaurant Group (BRG), the listed casual dining concern, has agreed to acquire the Individual Restaurant Company (IRC), the Manchester-based casual dining group, for a total consideration of £40.8m.
BRG has agreed to make an initial payment of £14.47m for the company plus assume £17.77m of debt within IRC.
It has also agreed to pay an additional consideration of up to £8.5m depending on the performance of certain IRC restaurants up to 31 March 2008.
The transaction constitutes a reverse takeover by IRC, which operates the Piccolino and Restaurant Bar & Grill chains, and is therefore subject to shareholder approval.
BRG is conducting a share placing to fund the deal with just under 30.5m new ordinary shares at 105p per share being placed, which will raise approximately £32m.
The funds will be primarily used to meet the initial cash consideration for the acquisition, repay existing debt of IRC and the merged group.
The deal is expected to be completed 22 December.
The new company will operate under the IRC banner, with the company’s existing management team of Steven Walker chief executive, Vernon Lord, financial director, and Iain Donald, operations director, assuming day-today management of the merged business.
Robert Breare will become non-executive chairman of the new company.
IRC, which is partly owned by Gresham Private Equity, currently operates 12 Piccolino restaurants, its Italian restaurant concept, and four Restaurant Bar & Grills.
It plans to open five to six Piccolino’s per annum, with sites in Didsbury and Sheffield planned to open earlier next year.
A fifth Bar and Grill is scheduled to open in May in Liverpool.
BRG operates five Zinc restaurants following a portfolio review undertaken by the company after it acquired the chain in December last year for £1.5m.
The company expects to restyle the entire Zinc estate by mid-2007, and also hopes to have in total 10 Zinc restaurants in operation by the end of next year.
Robert Breare, executive chairman of BRC, said: “This acquisition represents the ‘acquisition of scale’, which we have been striving to achieve over the past months pursuant to our publicly started strategy.
“I believe it represents first prize in terms of the strength of IRC’s management and the strength of its two brands, together with their excellent fit with our existing assets. The combined entity is well placed to grow earnings and maximize value for shareholders in the longer term.”
