Caffe Nero board rejects Issa brothers’ ‘unsolicited’ approach for coffee shop chain
An offer to buy high street coffee chain Caffe Nero by the billionaire Blackburn brothers behind EG Group has been rejected.
Mohsin and Zuber Issa approached the business over the weekend with their proposal, which has been rebuffed by the chain which claimed the “unsolicited” offer was a ploy to disrupt its CVA (company voluntary arrangement) currently under way “as a precursor to opportunistically acquiring the company at a later date”.
Caffe Nero is currently undergoing a CVA process aimed at reducing its rental bills.
It was claimed that part of the Issa’s offer was 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.
However, the company, on behalf of the directors, said in a statement: “Having considered carefully whether progressing with this unsolicited, highly uncertain approach has the potential to achieve a better result for creditors than the CVA as currently proposed, they do not believe this to be the case or to be in the long term interests of the group.
“This offer has been made without any understanding of Caffe Nero’s financial and trading position.”
Caffe Nero said the CVA proposal was designed to put the group “on a sustainable footing for the medium to long term” and provide the company “with the flexibility required for it to withstand the devastating impact of the current pandemic, and any further subsequent lockdowns”.
It said lenders had indicated their support for the CVA process.
“The lenders are aware of the approach … and have not requested a change in strategy and shareholders have undertaken to reject the offer,” the statement said.
The Caffe Nero CVA involves plans to close a number of the chain’s 650 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.