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Restaurant Group - To buy Wagamama

December 2018

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

  • Epic Code:
  • RTN
  • Price:
  • 259p
Restaurant Group has surprised investors with the transformational acquisition of sushi chain Wagamama from private equity group Duke Street for £357m cash and the assumption of £202m debt. The deal represents an enterprise value of £559m and will be funded by a £315m rights plus a new loan of £220m. That dwarfs current long-term borrowings of £29.3m.Wagamama made estimated EBITDA of £42.5m on an annualised basis for the 12 months ended August ’18 but RTN expects synergies of £22m. Adding them together would reduce the EBITDA multiple to a reasonable 8.7x.Duke Street paid £215m for Wagamama in 2011 and the latter boasts a strong record. Currently operating from 196 d ...

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