Analysts covering Wagamama-owner The Restaurant Group PLC (LSE:RTN) were quick to warn that the takeover offer of 65p per share from Apollo Global Management (NYSE:APO) was too low.
Even the market hovered at 66p, looking as if it was awaiting another chapter in the saga.
Well on Thursday, the market got what it was looking for, and came as little surprise for Shore Capital Group (LSE:SGR), which, in a recent research note, reiterated opinions it shared only a few weeks prior.
Apollo’s bid values the group at £700 million, placing the offer at around seven times current underlying earnings, according to Shore Capital estimates – with this ratio slipping even further to around four and a half should the group deliver on its margin rebuild strategy.
Additionally, the offer fails to consider the longer-term opportunity and accelerated growth which could be achieved when owned by one of the world’s largest private equity firms.
Deep pockets, a greater focus on growth, accelerated expansion plans, potential US and international franchises, the refinancing of debt, and additional disposals could all feature in the near future should shareholders accept the Apollo bid, the UK investment group believes.
“We believe any takeout valuation should reflect some of this opportunity. Given the news overnight, others seem to believe the same,” Shore Capital analyst Greg Johnson quipped in the broker note.
Whether the Pizza Express owner’s interest in the group will lead to a bidding war remains to be seen, after all the hospitality group has only said it has received a request from due diligence.
Shares in RTN are up 2.2% on Thursday following the news, having opened at around 68p.