Last weekend’s press speculation was that PizzaExpress was looking an increasingly attractive takeover target. A columnist in The Business newspaper suggested that the group might suit an aggressive private buyer wanting a low-risk return.
Following its 40% share dive over the past month, the company had a market value of £290m, or 10 times prospective year-to-June profits. Taking it private by paying a modest premium to the market and running the business for cash "would be a steal", said columnist Robert Bailhache.
A private buyer could then slash capital spending by abandoning the growth strategy of opening 30 restaurants a year and funds would also be conserved by removing the need to pay a dividend.
Sounds an attractive proposition, and one that could be applied to a few other listed operators in the restaurant, pub and bar arena – especially in the current climate of falling stock markets and increased trading competition.
If PizzaExpress, one of the real stars of the sector, can be talked of as a target, the whole sector could be vulnerable. Of course, that might not be a bad move. In tough times keeping your head down or running for shelter is often good advice.
Certainly the pressure from City investors to keep up rapid roll-outs has been the undoing of more than a few smaller companies – Fish and Chez Gerard are just two that spring to mind. It may be time for companies to reassess that strategy in the interests of longer term stability.
It also won’t have escaped anyone’s notice that some of the more apparently successful restaurant players at present, the likes of Nando’s, La Tasca, Wagamama and Yo! Sushi, are all privately owned.
In the current economic climate, however, speculation and gossip are the only guaranteed growth commodities. Who’s heading for the rocks? Who might buy whom? Are international players coming fishing, like McDonald’s did for Pret?
The options are intriguing; the permutations endless.
And, of course, it is the start of newspapers’ “silly season”.
Following its 40% share dive over the past month, the company had a market value of £290m, or 10 times prospective year-to-June profits. Taking it private by paying a modest premium to the market and running the business for cash "would be a steal", said columnist Robert Bailhache.
A private buyer could then slash capital spending by abandoning the growth strategy of opening 30 restaurants a year and funds would also be conserved by removing the need to pay a dividend.
Sounds an attractive proposition, and one that could be applied to a few other listed operators in the restaurant, pub and bar arena – especially in the current climate of falling stock markets and increased trading competition.
If PizzaExpress, one of the real stars of the sector, can be talked of as a target, the whole sector could be vulnerable. Of course, that might not be a bad move. In tough times keeping your head down or running for shelter is often good advice.
Certainly the pressure from City investors to keep up rapid roll-outs has been the undoing of more than a few smaller companies – Fish and Chez Gerard are just two that spring to mind. It may be time for companies to reassess that strategy in the interests of longer term stability.
It also won’t have escaped anyone’s notice that some of the more apparently successful restaurant players at present, the likes of Nando’s, La Tasca, Wagamama and Yo! Sushi, are all privately owned.
In the current economic climate, however, speculation and gossip are the only guaranteed growth commodities. Who’s heading for the rocks? Who might buy whom? Are international players coming fishing, like McDonald’s did for Pret?
The options are intriguing; the permutations endless.
And, of course, it is the start of newspapers’ “silly season”.
