Loungers backs improved £367m takeover offer
By Abigail Townsend
Date: Wednesday 15 Jan 2025
(Sharecast News) - Loungers has agreed an improved £367m bid to be taken private, the bar and restaurant operator confirmed on Wednesday, after shareholders pushed back against an earlier offer.
The AIM-listed business, which trades under the Cosy Club and Brightside brands, first agreed in November to be taken over by Abu Dhabi-backed Fortress Investment Group. The US-based firm already owns Majestic, Punch Pubs and Poundstretcher in the UK.
It accepted an offer of 310p per share, which valued the share capital at £338m and gave it an enterprise value of £350m.
However, a number of shareholders - including Downing, Gresham House, Axa Investment Management and Slate Investments, which own 10% - said they would not back the deal.
Gresham House, which owns 4%, called it an opportunistic bid that "substantially" undervalues the business. Axa, which also has a 4% stake, said it was "underwhelmed".
Loungers chair Alex Reilley said the improved offer made the deal "even more compelling for shareholders" and urged them to vote in favour.
The firm also warned it had "little confidence" that the stock market outlook for consumer stocks would improve in the foreseeable future.
"The directors consider that 2025 is likely to be a challenging year for British consumers, as retailers and leisure operators raise prices again to mitigate the rise in National Insurance contributions and the National Minimum Wage," it warned.
Domnall Tait, managing director of Fortress, said: "This increased offer for Loungers reflects our continued belief in the business and its management team, and we look forward to supporting them through the next stage of growth.
"Notwithstanding the recent challenges, Fortress remains a strong believer in the UK."
Under the terms of the revised offer, shareholders will receive 325p in cash for each scheme share. That values the entire ordinary share capital at £354.4m with an enterprise value of around £366.6m.
As at 1130 GMT, shares in Loungers were up 4% at 321p.
Russ Mould, investment director at AJ Bell, said: "Shareholders are not going to let a suitor take their company away on the cheap, and so we've got a higher bid for Loungers following earlier pushback.
"The big questions is whether the new price is enough to seal the deal. It is only 4.8% higher than the previous offer, so Fortress is not exactly offering a cherry on top. It's more a speck of sugar.
"Fortress says it won't go and higher, and Loungers says it's the best deal of all the ones of the table after the business was put up for sale.
"In essence, shareholder are being told not to be too greed - accept what's on offer or suffer the consequences."
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