Nightcap PLC (LON:NGHT), owner of the London Cocktail Club (LCC), said it has agreed to acquire the Adventure Bar Group (ABG), which it said will expand its operation to an additional nine bars.
The firm said the bars included in the purchase include seven established themed bars located in popular London locations, a large outdoor bar, food and entertainment venue in Birmingham, a bar site opening in Birmingham on May 17 and a 50% interest in a central London roof-top bar.
Nightcap said the purchase will provide it with “new customer offerings and significant brand roll out opportunities”, adding that ABG has a pipeline of additional sites and that it believed that nine bars have “significant potential for national expansion to up to 40 locations”.
The maximum consideration for the acquisition is £2.5mln, which the company said is comprised of £1mln payable on completion and up to £1.5mln of deferred consideration dependent on financial performance. The sum will be paid through the issue of up to 11.9mln new shares at a price of 21p each, a 37% discount to its closing price last Friday.
To fund the expansion, Nightcap also announced plans for a share placing to raise around £4mln at a price per share that is yet to be determined. The group said the funds raised will be used to pay down debt incurred through the transaction as well as fund the UK roll out of the Tonight Josephine, Luna Springs and Bar Elba brands included in the deal.
The firm also issued a short update on its current trading, saying that following the reopening of five of its LCC locations on April 12, these sites have “traded well and in line with management's expectations”. It added that the remaining five LCC locations are scheduled to reopen on May 17 and that it is “encouraged” by the level of bookings received.
"I am delighted to announce the acquisition of Adventure Bar Group, so soon after our IPO and initial acquisition of The London Cocktail Club. Tom and Toby have built an enviable portfolio of amazing brands and venues which have delighted their customers for years. Bringing Adventure Bar Group into the Nightcap family was a logical step for them in pursuit of their ambition to realise the full potential of their brands. I am truly looking forward to working with them to realise that ambition”, Nightcap chief executive Sarah Willingham said in a statement.
"The further expansion of Adventure Bar Group will take place during a time where the opportunity to acquire first class property at attractive rates is unmatched by anything I have seen during my 25 years in hospitality. The acquisition furthermore expands the opportunity to take on different types of property, particularly with the Bar Elba and Luna Springs concepts trading as large outdoor venues, benefitting significantly when trade is restricted indoors and during the summer period. We are all looking forward with much excitement to 17 May 2021 when our entire estate will be able to welcome back customers", she added.
Shares in the firm dropped 13.4% to 29p in early deals on Tuesday.