The Restaurant Group (TRG) has announced it has conditionally agreed to purchase the entire capital of Mabel Topco Limited – the holding company of a group that owns and operates Wagamama.
The deal is for a cash payment of £357 million, representing an enterprise value of £559 million. It implies a multiple of 8.7x LTM August 2018 EBITDA including cost and site conversion synergies.
In order to Wagamama’s maintain the businesses vision, culture and value particularly when it comes to its people, which have helped to drive performance over the years, TRG plans to operate Wagamama as an autonomous business within the enlarged group.
Jane Holbrook, current CEO of Wagamama, has decided to leave the business upon completion, having agreed some time ago that she would step down around the time of the next change of ownership.
Emma Woods, chief growth officer at Wagamama, will be promoted to CEO of Wagamama, reporting to Andy McCue, and will lead the business supported by the existing management team. Allan Leighton, current chairman of Wagamama, will join the TRG Board as a non-executive director upon completion.
Commenting on the transaction, Andy McCue, TRG CEO said: “This transaction is an exciting and transformative opportunity to create a business which can pursue a truly multi-pronged growth strategy and create substantial value for our shareholders.”
TRG said it believed the Wagamama brand is well-positioned to benefit from a number of consumer trends, including the increased focus on healthy options, high interest in Asian food, and the consumer demand for speedy service and convenience through delivery.
McCue said there would be a “continued selective UK rollout”, accelerated via conversions of some TRG sites, “by further leveraging the brand in Concessions both in the UK and internationally; by maximising the opportunities presented by the rapidly growing delivery sector; and by optimising the potential within international markets”.
TRG said the multi-pronged growth strategy would also include piloting pan-Asian ‘food to go’ offerings.
TRG also said it believed there is headroom to grow the size of Wagamama’s UK estate by approximately 40 to 60 additional restaurants without saturation. In addition it expects to convert at least 15 TRG sites to the Wagamama brand.
In the statement issued this morning, TRG said the Enlarged Group was be strongly growth orientated and would benefit from a clear scale advantage, enabling the creation of significant shareholder value.
It expects the Enlarged Group to derive circa 70% of outlet EBITDA from high growth segments, and for the acquisition to result in estimated cost synergies and site conversions synergies of approximately £22 million.
Completion of the deal is expected to occur in mid-December 2018.