£338m Loungers Deal Sparks Shareholder Debate
Posted by Emma on 2nd Dec 2024
A proposed £338 million takeover of Loungers, the café-bar group behind Cosy Club, Lounge, and Brightside, has met resistance from several of its largest shareholders. Fortress Investment Group, the US private equity firm behind the bid, has offered 310p per share—exceeding the company’s highest-ever closing price. Yet, key investors have voiced their opposition to the acquisition.
Mark Slater of Slater Investments, which holds a 10.4% stake in Loungers, criticised the timing of the offer. Speaking to The Times, he stated: “It’s the wrong time to be trying to sell a very good business of this kind.” His concerns were echoed by Dan Harlow, head of UK equity at AXA Investment Managers, and Gresham House, who also intend to vote against the deal.
Meanwhile, Canaccord Genuity Asset Management announced earlier today (29 November) its intention to support the bid. The firm owns 1.7% of Loungers, pushing the total shareholder backing to 41.9%—still far from securing majority approval.
Fortress Investment Group, which already owns UK brands, including Punch Pubs & Co., Majestic Wines, and Vagabond, has highlighted Loungers’ strong performance and growth potential as critical motivations behind the acquisition. Domnall Tait, managing director at Fortress, commented: “Loungers’ directors have delivered impressive increases in the number of locations, same-store sales and revenues over the past several years – despite the recent challenges faced by the wider hospitality sector. This growth, and management’s continued commitment to the business, give us confidence in the company’s growth potential and the opportunity to increase value.”
Loungers itself remains on an ambitious growth trajectory. Speaking at the Casual Dining Show in September, Justin Carter, the group’s managing director, revealed plans to add 35 new locations in the coming year, pushing its portfolio beyond 300 sites.
As the shareholders’ vote looms, the deal remains a point of contention, with Fortress’s vision for Loungers competing against investor concerns over timing and valuation. The outcome could redefine the future direction of this growing casual dining chain.