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Hostmore PLC’s shares plummeted on Monday following the announcement that the hospitality firm is no longer pursuing its acquisition of the TGI Fridays Inc brand.
Shares in Hostmore plunged 90% to 0.99 pence each in London on Monday afternoon.
The West Sussex, England-based owner of casual dining brand TGI Fridays had proposed a takeover of US-based franchisor TGI Fridays Inc, from TriArtisan Capital Advisors LLC and MFP Partners LP in mid-April. This merger was intended to create a larger firm that would remain listed in London.
The hospitality firm runs 87 restaurants in the UK and is currently in the process of selling its UK restaurants to new owners, as it looks to become a fully franchise-operated model.
However, following a management change in TGI Fridays Inc, Hostmore would no longer be able to collect royalties from the brand. This potentially impairs the future revenue of the business, as Hostmore said ‘the predictable and highly cash generative royalty stream of TGI Fridays was the primary attractive feature for the group in pursuing the acquisition’.
The company also said it was not expecting to ‘recover any meaningful value’ from the sale of its stores, the proceeds from which are likely to amount to less than the values owed to creditors and banks.
The TGI Fridays brand has its biggest market in the US, where there are 128 sites, alongside a further 270 sites globally. Last year, total restaurant sales hit $1.4 billion.
However, UK like-for-like sales fell 12% year-on-year in August 2024 as warmer weather meant fewer visitors and weaker consumer spending.
When the sales process concludes, Hostmore is expected to have wound up and delisted from the London Stock Exchange.
TGI Fridays in the UK will continue its operations under new ownership.
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