LONDON, UK: Hostmore plc has reached agreement on a non-binding basis for a proposed all-share acquisition of TGI Fridays Inc.

TGI Fridays is the global hospitality business that owns the American-themed casual dining brand “TGI Fridays” which is the Company’s franchisor. TGI Fridays primarily operates through franchising and licensing agreements in the US and in 43 international markets. It also operates a network of company-owned stores in the US.

The parties have agreed that the Proposed Transaction would result in existing Hostmore shareholders holding a 36% shareholding in the enlarged business upon completion, with TGI Fridays shareholders holding a 64% shareholding in the Combined Group.

The proposed transaction is being negotiated on an exclusive basis and is subject to, among other things, completion of confirmatory due diligence and the parties entering into binding transaction documentation.

The proposed transaction would be classified as a Reverse Takeover under the Listing Rules of the Financial Conduct Authority (“FCA”) and therefore would be conditional upon the approval of an ordinary resolution by existing Hostmore shareholders. Should the parties enter into binding transaction documentation, a summary of the material terms and conditions of such documentation will be set out in a further announcement in due course.

TGI Fridays is expected to be purchased for an enterprise value of £177 million, or approximately 5.4x TGI Fridays’ FY23 underlying EBITDA, representing a highly attractive acquisition multiple for a large, established global franchisor.

The combined group would have had underlying FY23 revenue of approximately £490 million, an approximately 9% EBITDA margin, and Free Cash Flow of more than £30 million.

Combined Group expected to be renamed “TGI Fridays plc”, with its shares admitted to trading on the London Stock Exchange’s Main Market under the share ticker “TGIF”.

Stephen Welker, Chairman 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.

Hostmore has made good progress in executing its turnaround strategy over the past year by reducing costs, revising our capital allocation policy to focus on debt repayment and shareholder distributions, and pursuing high ROI organic growth initiatives. I want to thank Julie McEwan, our CEO, Matthew Bibby, our CFO, and their colleagues, both in store and at executive levels, for their tireless efforts to put Hostmore in a stronger position which has led to the possibility of this compelling strategic transaction.

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.”

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