Proactive Investors - Wagamama-owner The Restaurant Group PLC (LON:RTN) could be poised to receive another bid after the takeover offer of 65p per share from Apollo Funds, was deemed too low by some analysts and investors.
“We do not believe it reflects the quality of the estate (especially having recently exited the challenged leisure business), the freehold asset backing (c £160 million) and the progress it was making across its strategic objectives on margin accretion (250-350bps) and deleveraging (under 1.5x EBITDA),” analysts at Shore Capital said.
Should all these value-generating processes be delivered, analysts believe shares in the hospitality group could be worth between 100p and 120p within the next three years.
Analyst Greg Johnson said: “We would see 80p per share as a starting point more consistent with the longer-term opportunity or maybe we just long for a bygone era for UK equities.”
It’s not just analysts who are pointing to another offer, the London-listed firm’s share price opened around 36% higher on Thursday and has remained flat at 66.05p throughout the day.
However, Liberum analysts said “it could be argued that a c30% premium is low in this market, we expect it to be successful due to the cash structure, activist shareholder support, helped by recently market turmoil”.
The broker did seem to be confident that the 65p per share offer is not the final chapter in the saga, instead targeting a 75p share price for the stock.
Adding in a research note that the £506 million bid implies a £701 million enterprise value, Liberum pointed out that TRG paid £559 million for Wagamama back in 2017.