EG Group eyeing shot at coffee shop chain Caffe Nero

The Blackburn brothers behind EG Group have approached Caffe Nero owner Gerry Ford with a bid to buy the struggling high street chain.

Sky News is reporting that Mohsin and Zuber Issa approached the business over the weekend with their proposal.

Caffe Nero is currently undergoing a CVA (company voluntary arrangement) process aimed at reducing its rental bills. A vote is expected to close tonight, but it is understood the Issa’s approach could lead to the vote being postponed.

It is claimed that part of the Issa’s offer is to pay Caffe Nero’s landlords in full the rent arrears owed to them, due to the massive reduction in customer footfall following the coronavirus pandemic.

Neither Caffe Nero nor EG Group have commented.

The CVA involves plans to close a number of the chain’s 650 Caffe Nero-branded sites, with the aim of switching to a turnover rent model for the remaining outlets.

Caffe Nero also operates 150 stores under brands such as Harris & Hoole, which are not part of the CVA.

The chain’s headcount numbers more than 5,000 and it serves 135m customers annually.

The Issa brothers control an international portfolio of retail businesses spanning the UK, US and Australia, focused on petrol station forecourt operations. Overall, the group employs more than 44,000 people across 6,000 sites.

In September, along with private equity backers TDR Capital, EG Group agreed to buy UK supermarket chain Asda from US retail giant Walmart for £6.8bn.

Earlier this month EG boosted its warchest by raising hundreds of millions of pounds through the sale of new preference shares.