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The UK franchise owner of TGI Fridays has agreed a £177mn reverse takeover that will see the US fast-food chain known for its potato skins, chicken wings and two-for-one cocktails list on the London Stock Exchange.
The deal will be a boost for the moribund London stock market, which on Tuesday faced the prospect of losing further companies following a proposed delisting of retailer Superdry and an agreed takeover for DS Smith, whose US buyer said would seek a secondary listing in London for the combined entity.
UK-based Hostmore, TGI Fridays’ largest global franchisee that is already listed in London, said it had agreed an all-share deal that would leave its investors with a 36 per cent stake in the enlarged business. Shareholders in the current US business will hold the remainder.
The deal reflects a valuation of 5.4 times earnings before interest, tax, depreciation and amortisation for 2023, which Hostmore said made TGI Fridays “a highly attractive acquisition”.
TGI Fridays — short for Thank Goodness It’s Friday — began in New York in 1965, and opened its first UK restaurant in Birmingham in 1986.
The chain has passed through several changes of ownership over the past two decades. Hostmore was created after Electra Private Equity spun off the UK operations of the American-themed restaurant chain on to the London Stock Exchange in 2021.
Shares in Hostmore have fallen more than four-fifths since they were floated, leaving it with a market capitalisation of just £22.7mn. Hostmore employs about 4,380 people in the UK.
In the US, TGI Fridays is controlled by TriArtisan Capital Advisors, a US-based private equity firm, which will remain a major shareholder in the combined group.
The two businesses will have combined revenue of £490mn, and have 189 restaurants in the US and the UK and a total of nearly 600 restaurants across 44 countries including franchises.
The new entity will be named TGI Fridays, with the US and global operations remaining in Dallas under chief executive Weldon Spangler.
TGI Fridays said the deal would create a “global hospitality brand” offering “operational and financial flexibility, increased scale and capital to deliver continued revenue”.
Stephen Welker, chair of Hostmore, said it would “reunite two businesses that are a natural fit, and were one business until as recently as 2014”.
Welker is a partner at Sherborne, the investment group that led the break-up of former Hostmore owner Electra in 2021. He added: “Hostmore has made good progress in executing its turnaround strategy over the past year.”
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