TGI Fridays in £177m merger with biggest franchisee
Restaurant operator TGI Fridays has reached an agreement with its largest franchisee for an all-share merger.
Under the agreement, the franchisee Hostmore will pay £177m with its shareholders holding 36% of the combined business’s shares, whilst TGI Fridays’ shareholders will hold the remaining 64%.
Hostmore said the combined group would have significantly increased scale, as well as improved strategic, operational, and financial flexibility.
In the 2023 financial year, the combined group would have had made an underlying revenue of approximately £490 million.
Stephen Welker, chair of Hostmore, said: “I am pleased to announce that we are in advanced discussions with TGI Fridays on the terms of a proposed transaction, which would reunite two businesses that are a natural fit, and were one business until as recently as 2014.”
He added: “This acquisition would give us the scale and flexibility to accelerate our existing strategy and enhance the financial outlook for Hostmore and scope for shareholder returns, while also strengthening our ability to provide an exceptional guest experience by harnessing our distinctive, trusted brand as the home of celebrations. We look forward to presenting our existing and new shareholders with the opportunity to participate in the significant value creation potential of the combined group going forward.”
Rohit Manocha, chairman of TGI Fridays, said: “Today marks an exciting moment for the next chapter of the TGI Fridays story, as we continue to drive forward our brand revitalisation strategy. Bringing together TGI Fridays with our leading franchisee partner in Hostmore, in our largest international market, the United Kingdom, has a compelling and highly complementary strategic logic to it.
“Our two companies share close ties and have a longstanding, excellent working relationship and mutual respect. A combined group would stand to gain from our focused efforts with the benefit of greater combined scale, efficiencies and flexibility.
“By joining forces with Hostmore, this would support our long-term organic growth strategy and enable us to better harness TGI Fridays’ global franchising and licensing infrastructure. I look forward to the prospect of working with the teams at Hostmore as a part of a new ownership structure, to ensure we keep delivering ‘That Fridays Feeling’ that our guests across the world know and love.”
Hostmore operates 89 UK restaurants under the TGI Fridays brand and is the chain’s sole UK franchisee.