Hostmore PLC 's (LSE:MORE) share price plunged by over 90% in early trading after the restaurateur announced it would no longer pursue its planned acquisition of TGI Fridays, Inc.
It walked away from the ambitious deal after TGI lost control of a key revenue stream, severely impacting its future earnings potential, which was central to the transaction.
Specifically, time was called on talks after the American group was removed as the manager of TGIF Funding LLC, the entity that controls the royalties from franchise agreements and intellectual property.
This loss of control over its highly profitable royalty stream prompted Hostmore to halt the acquisition, though both parties have left the door open for future discussions.
In addition to the failed acquisition, Hostmore also provided updates on its ongoing sale process for its corporate stores.
The company confirmed that while discussions with potential buyers are in advanced stages, the sale price is expected to fall short of covering its debts. As a result, shareholders are unlikely to recover any meaningful value.
Hostmore’s board expects the company to be wound up and delisted once the sale is completed in late September.
In early trading, the stock was off 8.6p at 0.89p.