TPG to snap up Prezzo

The US-based firm fought off competition from Advent International

UK casual dining restaurant chain Prezzo has agreed to be taken private by Texas-based firm TPG in a £303.7 million (€389 million, $484 million) transaction, according to a statement. 

The transaction values the company at 9.9x Prezzo's reported adjusted EBITDA of £28.9 million for the financial year ended 29 December 2013.

TPG has already received agreement from the owners of approximately 62.3 percent of the shares. Prezzo directors intend unanimously to recommend that Prezzo Shareholders vote in favour of the deal, according to the statement.

TPG fought off competition from Advent International, which also had discussions with Prezzo. TPG declined to comment beyond the statement.

AIM-listed Prezzo trades from 203 units, offers a menu with a variety of pizza, pasta, salad and grill dishes with a distinctive Italian flavour.

“The Prezzo story is one of consistent and robust growth, driven by a business model based on operational excellence”, Abel Halpern, a partner at TPG, said in the statement.

The firm said it believed that the next stage of Prezzo's development would be best achieved under private ownership, “accelerating the fulfillment of opportunities for additional restaurant roll-outs and operational improvements”.

TPG has invested in several food and food service companies globally, including Del Monte, Chobani and Ingham, and has been a long term investor in Burger King.

A TPG spokesperson declined to comment which fund TPG would use for the transaction. The firm is currently raising its Capital Partners Strategic Account, a buyout fund which will serve as a bridge between the expiration of TPG VI and the activation of TPG VII, PEI reported in April. The interim fund, which is expected to attract between $1.6 billion and $2 billion, will allow TPG to continue investing after its $19 billion Fund VI has been fully deployed.

Fund VI received a one-year fund extension in August 2013, which means its investment period will now end in February 2015. TPG needed at least two-thirds of the LPs in the fund to approve the extension, which included a provision that TPG would offset the management fee with 100 percent of any transaction fees on deals done during the extension period. Fund VI’s original transaction fee offset was 65 percent.

In February, The Washington State Investment Board said it would invest up to $600 million in TPG’s interim fund, PEI reported earlier.

TPG, which was founded in 1992, has $66 billion of assets under management.