Second major shareholder plans to vote down the Restaurant Group’s Wagamama deal
A second major investor will oppose the Restaurant Group’s (TRG) £600m acquisition of Wagamama on the grounds of price.
The investor – which declined to be named – told City PM that the multi-million pound price tag is too expensive.
It comes after top 10 shareholder Columbia Threadneedle, which owns 7.7 per cent of TRG, announced it would vote down the proposed acquisition at a meeting next week, citing the size and price of the deal.
Grizzlyrock Capital and Vivaldi Asset Management, which collectively hold 1.9 per cent of shares, have also announced their opposition to the plans.
However, several key investors have come out in support of the deal with Royal London Asset Management, which holds 5.7 per cent of the shares, joining J O Hambro in backing management proposals.
Royal London UK equities senior fund manager Martin Cholwill said TRG is “paying a fair price for an excellent asset”.
Graham Spooner, investment research analyst at The Share Centre, said: “In the present climate, when a number of chains are cutting back their presence on the high street as well as the wide range of choice for consumers, this appears to be a bold move by management and only time will tell if it was foolish.”
Despite investor concerns, influential proxy advisors Institutional Shareholder Services (ISS) and Glass Lewis have recommended that shareholders pass the proposals on 28 November.
ISS said there is strong strategic rationale in support of the acquisition and said the valuation is reasonable, however noted a substantial negative market reaction due to the size of the deal while the group is still in turnaround mode. Glass Lewis added that the deal is “generally reasonable and in the interests of shareholders”
Last week TRG chief executive Andy McCue 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."
City PM has contacted TRG for comment.