Toridoll Holdings, a Japanese conglomerate, announced it had made a £93.4mln offer for Franco Manca owner Fulham Shore.
The offer works out at 14.15p per share, a 35% premium to Tuesday’s closing price of 10.5p.
The bid represents yet another success for the AIM-listed company's executive chairman Michael Page, who has already been involved in the sale of Pizza Express and Gourmet Burger Kitchen.
The independent Fulham Shore directors, representing 22% of eligible voting rights, have already stated they would vote in favour of the deal.
Analysts at Shore Capital believe that already close to 50% will vote in favour of the deal.
Who is Toridoll?
The Japanese company is 33 years old and owns several restaurant brands across the world, including UK chains like Wok to Walk and Marugame Udon, as well as over 5,000 food stores globally.
It will team up with what it calls “its local buddy in Europe” Capdesia, a private equity firm which has stakes in Bento and Wasabi Sushi.
Capdesia is focused on growing European branded chains and is expected to help nurture Fulham Shore internationally – the firm also has the option to buy 49% of the Toridoll subsidiary purchasing the UK company.
Toridoll confirmed that the “friendly acquisition” was part of its plans “be the one and only good food company from Japan”.
Analysts at Shore Capital valued the conglomerate at £1.5bln.
Why Fulham Shore?
Since Covid, restaurant companies have faced empty tables, soaring bills and a lack of staff – to name just a few setbacks.
Companies like Wagamama owner Restaurant Group PLC (LSE:RTN) and Mitchells & Butlers PLC (LSE:MAB) have both lost more than a third of their value in the last twelve months.
Fulham Shore, which also owns The Real Greek, is no exception to this, experiencing a 15% fall in the past year.
However, the group is well exposed to the anticipated growth of Italian cuisine, in the opinion of Shore Capital.
Franco Manca has already begun offering cook-at-home pizzas in supermarkets, and the capital market company believe that it can expand the number of sites from 70 to 200.
The UK financial firm also believes the Real Greek stores could close to double to around 50.
The Greek restaurant has similarly begun expansion into supermarkets with a planned spice and herb mix set to go on shelves.
There is also the opportunity to grow Fulham Shore internationally as the company already has sites in both Spain and Greece.
“The price offered today for Fulham Shore equity comes in line with our fair value,” Shore Capital added.
What can go wrong?
Shareholders Fidelity Investments, Unicorn Asset Management Ltd and Canaccord Genuity together own more than 15% of the company and are yet to comment on whether any support the deal.
Whilst the deal represents a strong upside to Fulham Shore’s current share price, during the middle of 2021 the stock had reached close to 20p – an argument to the potential that unhappy shareholders could raise.
However, 20p or above has been the exception rather than the rule since 2017 and with no objections stated, Toridoll look well set to make its entry into the UK.