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The Restaurant Group (TRG) (LON:RTN) announced that it has agreed to acquire London-based noodle chain Wagamama from private equity firms Duke Street and Hutton Collings in a deal valued at £559 million.
‘This transaction is an exciting and transformative opportunity to create a business which can pursue a truly multipronged growth strategy and create substantial value for our shareholders,’ TRG CEO Andy McCue in a statement.
TRG plans to accelerate Wagamama’s UK expansion by leveraging its strong relationships and expertise in the casual dining market, as well as roll-out the pan-Asian chain internationally.
‘The transaction not only gives us a great brand but also creates a business with a multi-pronged growth strategy which will enhance earnings… by maximising the opportunities presented by the rapidly growing delivery sector,’ McCue added.
Wagamama posts strong growth
Duke Street acquired the London-based noodle chain back in 2011 in a deal that was valued at approximately £215 million, with the private equity firm mandating Goldman Sachs to sound out to strategic buyers earlier this year.
The decision to sell came at a time when the casual dining market in the UK has struggled as consumers spend less on eating out, with several rivals in the sector, including Jamie Oliver’s chain of Italian restaurants forced to make cut backs.
Despite the backdrop of challenging market conditions, Wagamama has continued to post strong results, with revenue growth of around 13.3% in 2018 to £307 million, up from £266 million a year ago.
‘Wagamama is a fantastic brand, with a market leading pan-Asian proposition, which has consistently outperformed the casual dining market in recent years,’ McCue said.
‘Central to this success has been a cohesive culture and clear brand values which are focused on making the right choices for customers,’ he added.
In a trading update, TRG announced that after 42 weeks of trading in 2018, total sales were down 0.5% when compared with the same period last year and like-for-like sales were 2.2% down.