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Mon 12th Nov 2018 - Update: The Restaurant Group, Azzurri, Giggling Squid, Diageo, Momo Canteen
The Restaurant Group announces fully underwritten rights issue: The Restaurant Group has announced a fully underwritten rights issue, which is intended to raise gross proceeds of approximately £315 million, to be used to fund part of the cash payment for the Wagamama acquisition. The rights Issue is being fully underwritten by JP Morgan Securities The rights issue will result in the issue of up to 290,430,689 new ordinary shares of the company (representing approximately 144% of the existing issued share capital of TRG and 59% of the enlarged issued share capital immediately following completion of the Rights Issue). The executive directors, who collectively hold 0.07%. of TRG’s total issued ordinary share capital as at 9 November 2018 will take their full pro rata entitlement under the terms of the Rights Issue to maintain their shareholdings in TRG, demonstrating their strong ongoing commitment to the TRG business and, following Completion, to the enlarged group (as defined below). The non-executive directors are fully supportive of the Rights Issue. Each of the non-executive directors who hold ordinary shares intends to take up in full his or her rights to subscribe for new ordinary shares under the rights issue. Andy McCue, TRG chief executive, said: “This a transformative deal which accelerates our growth strategy and adds a differentiated, high growth brand to our portfolio. The transaction benefits both businesses, creating an enlarged group that has scale benefits and will create significant value for our shareholders, underpinned by £22m of quantified cost and revenue synergies. We look forward to welcoming the Wagamama team into the Restaurant Group.”
Azzurri Group reports sales rise, underlying profits flat: Azzurri Group, which operates Zizzi and ASK has revealed a year of strong sales growth as it eyes expansion plans but said its profits were flat after absorbing higher costs. Sales rose 8.5% in the year to July, reaching £279.8 million, with like-for-like growth across all brands. Underlying earnings were flat at £37 million as margins fell from 14.5% to 13.2%. Speaking to the Press Association, chief executive Steve Holmes said it had been “a very challenging year from a cost perspective”.“Today the consumer is looking for great value,” he said. “So we’ve been very cautious about putting prices up and worked hard to offset a lot of those costs.” The group – which also owns the Coco di Mama and Radio Alice brands – now has 290 branches with plans to open more in the coming year despite a difficult backdrop with several restaurant groups shutting sites this year. Zizzi could now expand abroad following a successful debut in Ireland, where a third site will open by the end of 2018. Meanwhile, coffee and pasta chain Coco di Mama is set to open more sites in London. The Salisbury branch of Zizzi finally reopened last week, eight months after it was caught up in the poisoning of former Russian intelligence agent Sergei Skripal and his daughter Yulia. Holmes said the restaurant had been “very busy” since reopening. Commenting on the current market, Mr Holmes said: “My view is that the market fundamentals are quite strong, millennials are eating out a bit more, especially at places that provide experiences. There are winners and losers. The winners are the ones that are providing interesting, relevant and different propositions.”
Giggling Squid reports turnover and Ebitda rise: Giggling Squid, the Thai tapas brand founded by Andy and Pranee Laurillard and backed by Business Growth Fund, is on track to operate an estate of 50 restaurants within the next four to six years having opened six sites since the end of March. Andy Laurillard told The Times that retrenchment by rivals represented an opportunity to acquire good sites at cheaper rents. Giggling Squid has taken over sites previously owned by Strada and Café Rouge and the Jamie’s Italian in Kingston, where it secured a 30% cut in rent. The company, which was founded in 2002, currently has 29 restaurants in locations including Reigate, Chichester, Windsor, and Cheltenham. In 2015 it secured £6.4 million of funding from BGF, formerly the Business Growth Fund, which has a 29% stake in the business. The Laurillards own about 67%. Management, including Simon Kossoff, its chairman, owns the rest. In the year to March 31 2018 , Giggling Squid lifted underlying earnings before one-offs by 54% to £3.28 million, with turnover up 29% to £23.7 million.

Diageo sells 19 brands to Sazerac for $550m: Diageo has agreed the sale of 19 brands in an agreement with Sazerac for an aggregate consideration of $550 million. The net proceeds of approximately £340 million, after tax and transaction costs, will be returned to shareholders through a share repurchase following completion, which will be incremental to the previously announced programme of up to £2bn. The transaction, which is subject to regulatory approval, is expected to complete early in 2019. Ivan Menezes, chief executive of Diageo, said: “Diageo has a clear strategy to deliver consistent efficient growth and value creation for our shareholders. This includes a disciplined approach to allocating resources and capital to ensure we maximise returns over time. Today’s announcement is another example of this strategy in action. The disposal of these brands enables us to have even greater focus on the faster growing premium and above brands in the US spirits portfolio.” The brands included in the transaction are Seagram’s VO, Seagram’s 83, Seagram’s Five Star, Myers’s, Parrot Bay, Romana Sambuca, Popov, Yukon Jack, Goldschlager, Stirrings, The Club, Scoresby, Black Haus, Peligroso, Relska, Grind, Piehole, Booth’s and John Begg. The transaction is approximately 1.9 pence per share dilutive to pre-exceptional eps in the first full financial year. The transaction is expected to generate an exceptional gain on disposal of approximately £110m. Diageo has also agreed to enter into long-term supply contracts with Sazerac on completion for five of the brands each for a period of ten years. Supply of all other brands will transition to Sazerac within a one year period from completion.

Momo Canteen secures third site for new lunch concept: Pan-Asian concept Momo Canteen is expanding with the launch of its third branch in Canary Wharf, via CDG Leisure. The advisory firm secured a unit at 11 Westferry Circus for the restaurant, which is expected to open in early December. Momo Canteen, which also has branches in Barbican and Commercial Street, is the brainchild of Singaporean restaurateur Sidney Liu. It specialises in dishes from all over Asia and has garnered a loyal following, particularly with communities who miss the taste of home. With a commitment to authenticity, the restaurant employs chefs from all over the continent, such as Thailand and Japan, to recreate an array of diverse regional flavours and culinary techniques. Sidney Liu said: “This location is ideal for our new lunch concept as it gives us the chance to trial unique dishes such as fresh, protein-rich salads which will cater to a health-conscious workforce. As we are an Asian team, this is the cuisine which we love the most and are most familiar with, which means we don’t compromise on flavour and believe we offer excellent value for money.” David Kornbluth, CDG Leisure, who brokered the deal on behalf of the previous occupier, said: “Momo Canteen has secured a brilliant site and will benefit greatly from the strong lunch time trade in Westferry Circus. Not only is it a great addition to the area’s restaurants but it also meets the current market demand for quick service dining concepts which offer an elevated quality of food.”

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