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The Restaurant Group (TRG) said it backed the “certain value” offered by the deal amid consumer spending woes and wider economic uncertainty.
Apollo will pay 65p a share for TRG, which marks a 34% premium on the firm’s share price as of market close on Wednesday.
The deal values TRG shares at around £506 million, or £701 million including debts.
Shares in TRG jumped by 37% to 66p after news of the planned takeover.
The TRG board and management of TRG have reviewed in detail the strategic options available to the group, resulting in the announcement of the proposed sale of the leisure business
TRG owns the Wagamama chain of Asian noodle restaurants, as well as pubs including Brunning & Price, and food concessions at airports and travel locations, with around 380 sites in total across the UK.
The takeover comes after TRG recently agreed to sell off its loss-making leisure business restaurant chains Frankie & Benny’s and Chiquito to Big Table Group – the owner of Bella Italia, Las Iguanas and Banana Tree.
Big Table is paying a nominal £1 for 75 eateries under the deal and will receive a “contribution” from TRG of £7.5 million, with the sale set to complete on October 30.
TRG chairman Ken Hanna said: “The TRG board and management of TRG have reviewed in detail the strategic options available to the group, resulting in the announcement of the proposed sale of the leisure business.
“The TRG board continues to have confidence in the plan, but is cognisant of the premium and the certain value of the Apollo offer against the backdrop of a challenging macro-economic environment.”
Apollo said it has “closely followed TRG over many years”.
Alex van Hoek, a partner in Apollo’s private equity business, added: “TRG’s business has proven resilient through macroeconomic cycles but the outlook is still one of high interest rates and inflationary pressures and the company now needs the support of patient private capital, to achieve its ambitions.”
TRG recently posted half-year results showing it swung to a £2.3 million pre-tax profit in the six months to the start of July, compared with a £28.5 million loss in the same period a year earlier.
It has been impacted by increasing costs, as has the wider hospitality sector, but said in its results that costs are set to ease back.
Wagamama reported an 11% rise in like-for-like sales to dine-in customers over the first half but takeaways dropped by 8%, it said.
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