TDR, Capricorn launch rival pizza offer

The two firms have tabled an increased offer for PizzaExpress, valuing the UK pizza chain at £277m.

Private equity firms TDR Capital and Capricorn have revealed the details of their long-awaited offer for PizzaExpress, the UK restaurant chain at the centre of competing private equity offers.


Bidding via their holding company GondolaExpress, the two UK private equity firms have offered 387 pence per share for the UK-listed company, valuing it at £277.8m. The offer is at a 47 per cent premium to the PizzaExpress share price prior to the commencement of talks in December. More importantly, the offer is 5.4 per cent higher than the 367 pence per share offer made by Venice Bidder, the buyout vehicle controlled by ABN Amro Capital and former PizzaExpress director Luke Johnson.


The offer, which has been recommended to shareholders by the PizzaExpress board, is being backed with debt from Bank of Scotland and mezzanine financing from Hutton Collins.


Manjit Dale, co-founder of TDR Capital, said: “This is a fair price for a high quality business. PizzaExpress is an excellent first investment for TDR Capital.” Dale, formerly a senior figure in Deutsche Bank’s London-based captive buyout operation, is currently raising a new E500m mid-market buyout fund backed by Tudor Investment Corporation, the Boston-based hedge fund manager, which has provided a E160m cornerstone investment.


PizzaExpress enjoyed steady growth over three decades, increasing its number of restaurants to over 300, including restaurants in Japan, Russia, India and France. However, the company, which listed on the London stock exchange in 1993, reported its first fall in profits in June 2002, citing tough trading conditions in the Greater London region, the core market for PizzaExpress.


In its most recent results published in September, the company reported a 15 per cent increase in turnover to £213.7m, but like-for-like sales in its core PizzaExpress business fell by 1.5 per cent. Pre-tax profits were down 0.5 per cent from £39.9m to £39.7m. 


Venice Bidder said this afternoon in a statement that it is considering whether to increase its offer for PizzaExpress to a premium to the offer price announced by GondolaExpress. Venice Bidder currently owns 8.7 per cent of the company’s shares.


PizzaExpress is being advised by Credit Suisse First Boston. TDR Capital and Capricorn are being advised by ING Barings. The ABN Amro consortium was advised by Hawkpoint.