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Thu 23rd Apr 2020 - Update: Just Eat, Loungers, Gourmet Burger Kitchen, Costa and PizzaExpress
CMA clears £6.2bn merger between Just Eat and The Competition and Market Authority (CMA) has cleared the £6.2bn merger between Just Eat and The CMA stated: “ operates in 11 countries overseas, including the Netherlands and Germany, but has not been active in the UK since exiting in 2016. Both companies’ platforms link customers to hundreds of restaurants or food outlets, where they can browse takeaway options and order online. As part of its investigation, the CMA considered information suggesting that might have been well-placed to re-enter the UK market and compete with Just Eat, had the merger not gone ahead. As there are only a small number of companies that act as the middle-man between restaurants and customers, re-entry by could have given UK customers more choice – and possibly better value for money or quality of service – when deciding what to order. However, after carefully investigating these concerns and scrutinising large volumes of the two companies’ own internal business documents, the CMA is satisfied that there is not a material likelihood that would have re-entered the UK in the future, had the merger not gone ahead.” Colin Raftery, senior director of mergers at the CMA, said: “After interrogating how this deal is likely to affect the UK market, we are satisfied that there are no competition concerns. Millions of people in the UK use online food platforms for takeaways and, where a merger could raise competition concerns, we have a duty to rigorously investigate whether customers could lose out. In this case, we carefully considered whether could have re-entered the UK market in future, giving people more choice. It was important we investigated this properly, but after gathering additional evidence which indicates this deal will not reduce competition, it is also the right decision to now clear the merger. During the covid-19 outbreak, the CMA is working with businesses where it can to be flexible – for example, by recognising that there may be delays in providing the information it needs to conduct investigations. However, it is also trying to complete investigations efficiently at this time, wherever possible, to provide businesses with certainty. In this case, the CMA was able to publish its final decision 26 days ahead of the statutory deadline.”

Loungers raises £8.3m in new equity: Loungers has raised £8.3m by placing 9,250,000 new ordinary shares, representing 10% of the issued Ordinary Shares, at an issue price of 90p. The Placing Price represents a premium of 16.1% to the closing price on 22 April 2020 of 77.5 pence per Ordinary Share. The company stated: “As outlined in the launch announcement for the Placing, the directors of the company (the ‘directors’) believe that the net proceeds of the Placing (approximately £8.1m) will, when combined with its new bank facilities, provide the company with sufficient capital to manage through the covid-19 crisis, even in the event of a protracted period before the government allows hospitality businesses to re-open, and to subsequently recommence its roll-out at the appropriate time.” Certain directors have agreed to subscribe, in aggregate, for 822,787 Placing Shares at the Placing Price. In addition, funds advised by Lion Capital LLP have agreed to subscribe for 3,000,114 Placing Shares at the Placing Price. Chief executive Nick Collins said: “Having continued to outperform our market immediately prior to lock-down, we are determined to emerge strongly from this period and rebuild that momentum. We have taken all the self-help measures open to us and are indebted to our teams for their ongoing support and engagement in the communities which they serve. Government support is welcomed and continues to be critical to us, and the wider hospitality industry, however it is imperative this is maintained throughout the re- opening phase until consumer confidence rebuilds. With our newly agreed debt facilities and the successful equity fundraising, we are in a strong financial position with sufficient liquidity to come through this crisis and to take advantage of the opportunities that will emerge when restrictions are lifted.” Founders Alex Reilley and Jake Bishop acquired 654,675 and 650,675 shares respectively, taking their percentage ownership of the enlarged share capital to 7.08% and 7.03% respectively.

GBK appoints advisors on options going forward: Gourmet Burger Kitchen (GBK) has reportedly appointed advisors to assess its options going forward. ITV News reported yesterday evening that the Famous Brands-owned business had appointed Deloitte to oversee this process, with speculation increasing that the group would need to be placed into administration after parent company Famous Brands announced earlier this month that it was pulling the plug on its investment. It comes at a time when it is thought the brand is considering re-opening a few sites for delivery only. The South Africa-based Famous Brands, which also operates the Wimpy and Steers concepts, acquired the then 75-strong GBK in the summer of 2016 in a deal believed to be worth circa £110m. GBK undertook a company voluntary arrangement at the end of 2018, which saw circa 20 sites close. The same ITV News report said that FTI was advising the syndicate of banks which have loaned money to the Azzurri Group, the owner of the ASK Italian, Zizzi and Coco Di Mama brands. However, Propel understands that Azzurri extended its facilities with its banks before Easter to give the company liquidity through this “hibernation” period. FTI had been advising the group’s seven banking partners on that process.

Costa to re-open four sites: Costa Coffee, which is owned by Coca-Cola, is to become the latest hospitality brand to announce it will re-open a handful of its sites. The company has announced it will open four sites, including two drive-thru units, tomorrow (24 April), with opening hours set to be 8am to 4pm. The sites are Mansfield Sutton Road (drive-thru), Manchester White City (drive-thru), Manchester Oxford Road (delivery only) and Avonmeads Retail Park, Bristol (delivery only). The company said: “A massive thank you to the team members that have volunteered to work – helping support key workers. Our priority remains the safety of our teams and customers.” Costa has more than 2,300 branches in the UK but all have been closed since 23 March when the country went into lock-down. Initially, Costa remained open during the coronavirus outbreak by offering a takeaway-only service.

Bowley – rent remains biggest present challenge: PizzaExpress UK managing director Zoe Bowley has said rent remained the biggest present challenge to the business and “no-one should stand to face the failure alone”. She told Propel: “This has to be a three-way thing – between the operators, the landlords and the government. We get the government can’t fund all the rent bills, and landlords can’t give up on an income stream indefinitely, but equally the operators can’t pay rental liabilities with no income or support. There has got to be shared pain. I don’t think deferring for a few months is a viable option, as operators won’t be able to pay one lot of rent, let alone the deferred part on top. We need some quick action on the debt enforcement, otherwise statutory demands that some businesses are receiving will lapse, the winding-up petitions will follow and we will get ourselves into an unprecedented situation. We’ve had good relationships with our landlords over the years – we’ve got long leases, we’ve honoured rents, we’ve got lease extensions, so we have to get some mutual support back. This is no one’s fault but we have to work at it together.” She also said the government “mustn’t move on too quickly once the shutdown has passed”. She said: “The loud echoes of what has happened over the last few weeks will continue for some time, so the ongoing listening and understanding, and actions will be vital in delaying more large-scale business failures. Some of the core issues haven’t gone away, including the long-term impact of Brexit on the industry.”

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