LONDON (Reuters) - Caffe Nero Group Plc CFN.L agreed on a 225-million-pound management buyout on Thursday and said that going private would help the coffee bar chain accelerate an overseas expansion drive.
Caffe Nero said it had agreed on a 270-pence-a-share offer in cash to be made by Rome Bidco, a firm newly incorporated for the purpose of making the offer.
The deal represents a 36.5 percent premium to the average closing price of 197.7p for the three months prior to the announcement on August 17 that it was in offer talks.
Rome Bidco has offered to buy all Caffe Nero shares not owned by Saratoga Ltd. and Paladin Partners — the two biggest shareholders of Caffe Nero and firms that represent the coffee bar chain’s chief executive Gerry Ford.
Under the arrangement, Saratoga and Paladin will exchange their 43 percent stakes in Caffe Nero for ordinary shares and preferred equities of Rome Bidco.
“The reason for the flattened share price over the course of the last 18 months or so has been because I think some of the shareholders didn’t want us to go international, while others did,” Ford told a conference call.
Ford said the delisting was expected by the end of January and the company would look at northern European countries and Gulf states for its medium to long-term expansion.
“In northern Europe... you have relative wealth and high consumption of coffee and increasingly the understanding of high quality coffee... Quality Italian coffee, which is what we have, doesn’t exit in the number of those countries. So we think there is good opportunity there.”
Shares in Caffe Nero, which went public in 2001 at 50p, were up 1.9 percent to 269-1/4p by 9:35 a.m. Since its market debut, the company has grown to run 290 stores from 58.
“Whilst the accelerated store roll-out programme, which will take the company into international markets, is fraught with risks, we believe that Coffeeheaven has highlighted the potential for an international strategy,” Numis said in a note.
Last week, London-listed Coffeeheaven COH.L, which operates 59 stores in five European markets, reported a 28-percent rise in like-for-like sales for the six months to end-September, thanks to growing economies of central Europe.
Caffe Nero said the offer represents an exit multiple of more than 15 times EBITDA (earnings before interest, tax, depreciation and amortisation) for the year to end-May.
Citigroup is acting as financial adviser to Rome Bidco and PricewaterhouseCoopers is Caffe Nero’s adviser.