THE hospitality group that trades as TGI Fridays in the UK has moved to acquire the American-themed casual dining brand from its New York-based private equity owner for nearly £180 million.

Hostmore, which has around 90 outlets in the UK, has reached agreement on a non-binding basis for a proposed all-share acquisition of TGI Fridays Inc.

The reverse takeover would see Hostmore shareholders hold 36% of the enlarged business, with TGI Fridays shareholders holding 64%. It values TGI Fridays at £177m.

Shares in Hostmore closed up more than 4% at 18.75p on the news.

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The proposal comes as the hospitality continues to battle a cost of doing business crisis, with operators expressing concern over the impact of this month’s increase in the national minimum wage.

Hostmore floated on the London Stock Exchange in November 2021, as part of TriArtisan Capital Advisors’ final asset disposals of Electra, the UK-listed private equity group. TGI Fridays has been majority-owned by funds managed by TriArtisan Capital Advisors LLC or its predecessor, TriArtisan, since 2014.

The company mainly operates through franchising and licensing agreements in the US and it 43 international markets; it also has a network of company-owned stores across the Atlantic.

Should the proposed deal win approval from shareholders and regulators, the combined company will be renamed TGI Fridays, with shares admitted to the main market of the London Stock Exchange.

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The enlarged group would have had underlying revenue of around £497m for 2023, £306m from TGI Fridays and £191m from Hostmore. It would have around 680 stores (593 TGI Fridays, 89 Hostmore) and more than 8,800 employees (4,447 TGIs, 4,380 Hostmore).

It is expected that the company would utilise the same governance structure as Hostmore, meaning the chairman, senior independent director, and board committee chairs will continue in the same roles after the deal completes.

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 (return on investment) 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.

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“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.”

TriArtisan is a long-standing player in the restaurant sector, with investments in PG Changs, Hooters and 3C, as well as TGI Fridays.