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TDR, Capricorn agree to Cinven’s £559m potential bid for Gondola

Cinven has said it is considering making an offer for the quoted owner of two UK pizza chains, whose main shareholders have agreed to sell.

TDR Capital and Capricorn Ventures, two private equity firms, have agreed to sell their 25.1% stake in Gondola, a quoted UK pizza restaurant group, to Cinven, a European buyout group, for £135 million (€199.5 million; $253 million), should it go ahead.

The two private equity shareholders, which floated Gondala in 2005, have signed a scheme of arrangement to sell their stake in the company for 400p a share, while Cinven has said it is considering making an offer for the rest of the company at 415p a share, valuing it at £559 million.

The arrangement, which will give Cinven a degree of certainty ahead of a formal bid, means TDR and Capricorn lose out on an additional £5m on offer to other shareholders.

TDR and Capricorn have also undertaken to vote against any competing bids below 456.5 pence a share.

In the event a higher bid is accepted, TDR and Capricorn have agreed to pay a break fee of no less than £15million or 25% of the difference between Cinven’s 415 pence a share offer and the rival offer on their shares.

The undertakings lapse on 31 December 2006 or two months after Cinven makes a firm offer through its bid vehicle Paternoster Acquisitions.

Gondola’s shares in last 10 days

Gondola’s shares began trading today at just under 402 pence per share. The shares then soared to 408 pence just after 10am BST before settling down again at 402 pence by 3.15pm BST.

Merrill Lynch is advising Gondola on the approach, less than a year after acting as global co-ordinator, and joint bookrunner with Deutsche Bank and Goldman Sachs, on the flotation of the private equity backed group last November.

The potential bid price offers a 30% premium to Gondola’s float price of 320 pence, when it raised £135 million, valuing the company at £431 million.
Freshfields Bruckhaus Deringer, an international law firm, advised the bookrunners on the float and is advising Paternoster and Cinven.