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Fri 9th Jun 2023 - Nightcap to acquire Dirty Martini for £4.65m, Fulham Shore shareholders approve £93.4m takeover deal
Nightcap to acquire Dirty Martini business for £4.65m, FY23 adjusted Ebitda expected to be below current market expectations: Nightcap – the owner of The Cocktail Club, the Adventure Bar Group and the Barrio Familia group of bars – has entered into an agreement to acquire the ten-strong Dirty Martini business, plus Tuttons British Brasserie in London’s Covent Garden, for a consideration of up to £4.65m. The acquisition, which is made up of £4.15m in cash on completion and a further £500,000 payable based on certain conditions being met, is being undertaken as part of a pre-pack administration process of Dirty Martini’s parent companies. To fund the acquisition, Nightcap has raised a total of £5m, through a subscription of 19,583,333 of new ordinary shares in the company at 12p per share, being a premium of 26.3% to Nightcap's last closing mid-market share price on 8 June, to raise £2.35m and the issue of £2.65m new convertible loan notes. The company will acquire ten Dirty Martini bars and the Dirty Martini brand, which it said has “significant roll-out potential”, and provides strong opportunity for “material synergies to be recognised across the enlarged business”. The Dirty Martini estate comprises five bars located across London (in Bishopsgate, St Paul's, Monument, Hanover Square and Covent Garden) and five bars located in Birmingham, Bristol, Leeds, Manchester and Cardiff. Based on unaudited management accounts for the year ended 31 December 2022, at the aggregated site level, Dirty Martini and Tuttons generated revenue of £23.7m, Ebitda of £3.9m and a pre-tax profit of £3.1m. The businesses had an unaudited asset value of approximately £4m at 31 December 2022. Sarah Willingham, chief executive of Nightcap, said: “We couldn't be happier to welcome Dirty Martini to the Nightcap family. These are long-established, well-run bars that fit well with our existing portfolio and our model of running multiple brands in clusters in London and around the country. Dirty Martini's late-night bars operate in a similar way to ours. They have great bars in excellent locations with impressive fitouts, following more than £10m of capital investment. We will embed the Dirty Martini site operations into our existing head office infrastructure and expect to see synergies across the business as we continue to grow. This is the fourth acquisition in under three years and marks yet another important strategic step toward building the UK's leading bar group. While the rail strikes have been detrimental to our current year performance, we are extremely proud of Nightcap's successful new openings, the growth we have achieved and the foundation we have built for the future. Without the impact of rail strikes we would have had an exceptional year, which bodes well for next year. With the acquisition of Dirty Martini, we have a sizeable late-night bar group with significant potential for further growth in the years ahead and we therefore look to FY2024 with increased confidence.” The business said that Dirty Martini experienced tough trading conditions over the last year, in line with the hospitality industry in general, including the negative consequences of train strikes, the cost-of-living crisis and inflation. It said the Dirty Martini business has also struggled with “significant indebtedness”. Nightcap said: “These factors have now led to the business being put into administration and providing Nightcap with the opportunity to acquire the assets at an attractive price. The board considers the ten Dirty Martini sites to be sound operating venues, which will benefit significantly from being part of the larger Nightcap bar group.” Nightcap has employed all staff working at the ten Dirty Martini bars and Tuttons restaurant as part of the acquisition. Updating on trading, Nightcap said: “While the cost-of-living crisis has affected the entire hospitality industry, as indicated in Nightcap's previous updates, the influence of train strikes has been the main source of disruption to the group's trading in the 52-week period ending 2 July 2023 (FY2023). Recovering the lost revenues and Ebitda from the significant level of train strikes held across the UK, particularly during the key 2022 Christmas trading weeks, has proved a particular challenge. Management currently estimates that the 28 train strike days over FY2023 have cost the group a total of approximately £2.9m in revenue and £1.9m in Ebitda. In relation to FY2023, the board currently expects to report revenues that are broadly in line with current market expectations, with adjusted Ebitda expected to be below current market expectations. Despite macroeconomic and train strike related challenges, the board continues to be impressed with the resilience of Nightcap's brands and its customers. This provides assurance of the strength and full potential of Nightcap's business when allowed to trade uninterruptedly, especially when combined with the Dirty Martini assets, and the board looks forward to the future with confidence. In the absence of further rail strikes or other major interruptions, the board remains positive about the outcome for the 52-week period ending 30 June 2024 due to the organic growth it anticipates in all of the group's bar brands and the positive contribution from the Dirty Martini assets.” Nightcap features in the Who’s Who of UK Food and Beverage, which is available to Premium subscribers, and the latest version will be released next Friday (16 June). It is the first database where full profiles of 693 of the UK’s top food and beverage operators are available in one place. The next edition features 40 updated entries, while 13 new companies will be added. The companies, listed in alphabetical order, will have their most recent results reported as well as broader information around Ebitda, plans and trading style available. The database merges Companies House information, interviews and other public information to provide an easy to reference and exhaustive guide to the sector. Companies can now have an unlimited number of people receive access to Propel Premium for a year for £995 plus VAT – whether they are an operator or a supplier. The single subscription rate is £495 plus VAT for operators and £595 plus VAT for suppliers. Email to upgrade your subscription

Fulham Shore shareholders approve £93.4m takeover by Japanese investment firm Toridoll: Shareholders of Fulham Shore, the Franco Manca and The Real Greek operator, have backed the £93.4m takeover by Great Sea Kitchens, a newly incorporated company established on behalf of Toridoll Holdings Corporation. Toridoll, which is a global food company listed on the Tokyo Stock Exchange with circa £1bn consolidated net sales and a current market capitalisation of approximately £1.5bn, has set up a new company called Bidco to oversee the acquisition of the 97-strong Fulham Shore. Founded in 1990 by Takaya Awata, Toridoll, which is partnering with restaurant sector specialist fund Capdesia on the acquisition, aims to have more than 5,500 stores worldwide with increasingly balanced growth across diverse group brands both in Japan and overseas. Its current European brands include Marugame Udon, Shoryu and Wok to Walk. Fulham Shore stated: “The board is pleased to announce at the court meeting and the general meeting, each held earlier today (Friday, 9 June) in connection with the acquisition: the requisite majority of scheme shareholders voted in favour of the resolution to approve the scheme at the court meeting; the requisite majority of Fulham Shore shareholders voted to pass the resolution necessary to implement the scheme by amending the company's articles of association at the general meeting; and the requisite majority of independent Fulham Shore shareholders voted to pass the rule 16 resolution in relation to the retention arrangements.” David Page, executive Chairman of Fulham Shore, said: “We are pleased that our shareholders have resoundingly recognised the attractiveness of this transaction for all our stakeholders. The combination with Toridoll and Capdesia will mark a hugely exciting new chapter for the business and its two outstanding brands, Franco Manca and The Real Greek. Toridoll is a world-class operator, and we strongly believe that in partnership with Capdesia their extensive experience of successfully building outstanding, experience-led restaurant businesses will enable Fulham Shore to fulfil its exciting long-term potential.”

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