Another top investor opposes £559m Wagamama takeover
Investor services and shareholders are lining up to either support or oppose the deal.
Another major investor in The Restaurant Group has opposed the company’s proposed takeover of Asian food chain Wagamama.
Columbia Threadneedle, which owns 7.7% of the group, said there were too many “red flags” surrounding the deal.
James Thorne, UK equities fund manager at the asset management firm, said: “The strategic appeal of combining two good businesses may be understandable, but the size and price of the deal at this point in the cycle throws up too many red flags. The share price plunge reflects the depth of concern there is.”
The announcement is the latest in a tit-for-tat between investors as they prepare to vote on the £559 million acquisition on November 28.
Earlier on Tuesday morning, investor advisory service Glass Lewis recommended voting in support of the deal, echoing advice from the Institutional Shareholder Services (ISS) last week.
Glass Lewis advisers said: “Strategically, we understand that the proposed acquisition of Wagamama fits with TRG’s existing industry focus on restaurant operations in the UK and we expect the combined company could likely benefit from greater economies of scale and a more attractive growth profile.”
Top-five shareholder JO Hambro also signalled its support for the takeover over the weekend.
But other investors have opposed the move, with US activists GrizzlyRock Capital and Vivaldi Asset Management arguing it would “dramatically” weaken TRG’s balance sheet.
The Restaurant Group, which owns leisure brands including Frankie & Benny’s and Chiquito, announced its intention to acquire rival restaurant chain Wagamama in a deal worth £559 million in October.
It will embark on a rights issue to raise £315 million and draw on a £220 million revolving credit facility to bankroll the deal.