The Restaurant Group plc Shareholders GrizzlyRock Capital and Vivaldi Asset Management Announce Opposition to Proposed Acquisition of Wagamama
CHICAGO--(BUSINESS WIRE)--Nov 14, 2018--GrizzlyRock Capital and Vivaldi Asset Management:
Proposed Transaction Would Destroy Shareholder Value:Massive Debt Incurrence Dramatically Weakens the Balance Sheet Execution Risk Not Factored into Management’s Deal Rationale £150 Million (25%) Decline in Market Capitalization Since Transaction Announcement Rights Offering Size at 70% of Market Capitalization is Far Too Large Transaction Dilutes Management’s Focus from the Current Leisure Turnaround and Growth of Valuable Pubs & Concessions
GrizzlyRock Capital and Vivaldi Asset Management manage investment funds that jointly own 3.9 million shares (1.9%) of Restaurant Group plc (RTN:LSE). Portfolio Manager Kyle Mowery stated: “ We unequivocally oppose the proposed Wagamama transaction as overly risky and expensive for Restaurant Group shareholders. Management grossly miscalculated their cost of capital and shareholder willingness to participate in a transaction. Given a roughly 25% decline in share trading price since the deal announcement, many other shareholders apparently share our negative view of the transaction. We urge management to pay the nominal, £6 million, deal break fee and continue operating the current business on behalf of shareholders. ”
Mowery continued: “ At today’s share price, the £315 million rights offering management is asking shareholders to provide for the transaction is nearly 70% of current market capitalization. This amount both in absolute size and especially percentage of the current market capitalization is far too large. ”
Mowery concluded: “ In our opinion, management has been successfully executing the turnaround plan for Restaurant Group’s struggling Leisure assets. For instance, like-for-like sales were up 1.4% in the 4 week period following the end of the World Cup. Additionally, tuck-in acquisitions and organic growth have also increased Concessions and Pubs business value. We believe Restaurant Group’s current businesses are worth over £4.50 per share, which indicates upside of over 50% compared to the pre-transaction announcement share price and roughly 100% over the current price. Shareholder value would be maximized by management walking away from this destructive transaction and focusing on operating the current business.”
About GrizzlyRock Capital
GrizzlyRock Capital is an alternative asset management firm seeking to deliver risk-managed returns to investors via opportunities across equity markets. The firm takes a value-investing approach to security selection, relying on rigorous fundamental analysis to identify dramatically mispriced corporate securities from the entire capital spectrum. GrizzlyRock Capital is headquartered in Chicago, Illinois.
About Vivaldi Asset Management
Vivaldi Asset Management, LLC is an SEC-registered investment adviser. Founded in 2013, Vivaldi specializes in structuring and managing alternative investment, multi-manager, and multi-strategy funds. Vivaldi prides itself on its ability to combine rigorous research and risk management processes with disciplined portfolio construction and management. Vivaldi is headquartered in Chicago, Illinois.
View source version on businesswire.com:https://www.businesswire.com/news/home/20181114005488/en/
CONTACT: Kyle Mowery
KEYWORD: UNITED KINGDOM UNITED STATES EUROPE NORTH AMERICA ILLINOIS IRELAND
INDUSTRY KEYWORD: RESTAURANT/BAR PROFESSIONAL SERVICES FINANCE RETAIL
SOURCE: GrizzlyRock Capital and Vivaldi Asset Management
Copyright Business Wire 2018.
PUB: 11/14/2018 07:57 AM/DISC: 11/14/2018 07:57 AM