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Restaurant Group tumbles as CEO quits unexpectedly

The FTSE 250 group said it expected Andy McCue to remain in his post while a successor was found
Wagamama
McCue was instrumental in the group's £550mln acquisition of Wagamama last year

Restaurant Group PLC (LON:RTN) tumbled in late-morning trading Thursday after its chief executive, Andy McCue, unexpectedly announced his resignation citing “extenuating personal circumstances”.

The FTSE 250 group, which owns restaurant chains including Wagamama and Frankie & Benny’s, said it expected McCue to remain in post while a successor was found, adding that trading remained in line with expectations ahead of its results on 15 March.

READ: RBC initiates Restaurant Group at ‘outperform’ as Wagamama acquisition “materially improves” growth profile

"In recent years, we have achieved much in a challenging market. I'm confident The Restaurant Group is well positioned with the scale, talent and levers to drive profitable growth” McCue said in a statement.

“While I recognise that this decision is untimely, it is the right one for me and my family.”

Debbie Hewitt, Restaurant Group’s chairman, said: "Andy has brought a strong vision, developed a first-class team and laid the foundation of the Company's transformation. Whilst we are clearly disappointed that he will not be able to provide the long-term leadership for the business, we understand and respect the decision he has made purely on personal grounds."

Broker says move “a surprise”, queries influence of Wagamama acquisition and rights issue

In a note to clients, analysts at broker Liberum said that McCue’s resignation “comes as a surprise” given the acquisition of Wagamama last November and the fact that the group was in the middle of a “crucial stage of integration” to deliver £22mln in synergies, which would add more instability and risk.

RTN acquired Wagamama in a controversial £550mln deal that nearly 40% of shareholders voted against.

READ: The Restaurant Group gets shareholder approval for £550mln Wagamama takeover, although nearly 40% voted against

As McCue was instrumental in the acquisition, and a £315mln discounted rights issue that followed, Liberum said that the process may have “taken its toll” and contributed to his decision to resign.

“The timing of this announcement may also lead to speculation that a turnaround in the core business is still a long way off,” the broker added.

Shares were down 13.4% at 126.4p.

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