Lion Capital has agreed to sell Wagamama, the fast-casual noodle chain, to private equity group Duke Street.
The deal price was undisclosed but it is thought that Duke Street will pay around £215m for the chain. The transaction is expected to close in the next 30 days.
Wagamama, which is led by chief executive Steve Hill, currently operates c.70 restaurants in the UK. It also has franchises in European countries, the Middle East and Australia, plus three sites in the US, with a fourth set to open in Washington DC later this year.
Duke Street plans to expand the chain further.
Hill said: “We have enjoyed working with Lion over the past six years. Thanks to the continued dedication of the Wagamama teams throughout the world, we have achieved some great results over this period and further expanded the Wagamama brand both in the UK and abroad. We are all very excited about the future and look forward to working with Duke Street, which will see Wagamama through its next stage of growth.”
"Wagamama has the potential, with additional funding and operational expertise from Duke Street, to extend its category leadership in the UK and accelerate its plans for international expansion," said Duke Street partner John Harper.
Lyndon Lea, Partner of Lion Capital, which appointed NM Rothschild to sell the chain in September last year, said: "When we acquired Wagamama in 2005, we believed there was significant potential for expansion of its unique and highly-popular format in both its core markets and new geographies.
“Under our ownership, Wagamama more than doubled the number of restaurants in the UK, successfully entered the US with the opening of three sites in Boston and added nine new franchise partnerships and 25 new restaurants around the world. We wish both the management team and Duke Street continued success with the business.”
Financing for the acquisition was provided by GE Capital, Investec and Lloyds who arranged and underwrote a senior secured debt package, as well as working capital and capex facilities to support the continued roll out of new restaurants.
Hutton Collins, which has invested in Wagamama on two previous occasions, provided a combination of mezzanine and equity financing as part of the debt finance.
The deal should secure a hefty windfall for Lion, which bought the business for around £100 million in 2005. A price tag of £215m would represent an ebitda multiple of just over 10 times.
Wagamama’s most recent annual results, published in August, showed underlying earnings up 22% to £20.9m in the 12 months to April and sales up 8.6% to £109.6m.
Talks over a deal between Lion and another suitor for the chain, Morgan Stanley, ended at the start of this year, after they had been resurrected at the beginning of December.
The chain had previously also attracted strong interest from InvestCorp, the Middle East-based buyout group and the India Hospitality Corporation, which were the early favourites to land the business.
Lion had attempted to float the business in 2007.
Wagamama, which employs around 2,350 staff in the UK, was founded in Bloomsbury, London, in 1992 by restaurateur Alan Yau, sells more than 12 tonnes of noodles a week
