Investment group to acquire Loungers for £338.3m

Fortress Investment Group, through CF Exedra Bidco, has agreed to acquire Loungers, valuing the hospitality company at approximately £338.3m.

The acquisition, which is expected to complete in the first quarter of next year, will be executed via a scheme of arrangement, proposes a cash offer of 310 pence per share. The directors of Loungers have unanimously recommended that shareholders accept the cash offer.

Alex Reilley, the chairman of Loungers, said: “We remain very confident about Loungers’ future prospects and the half year results that we announced separately today clearly demonstrate the strong momentum that we have in the business.

“Loungers has come a long way since we opened our first site in Bristol in 2002, and we are hugely proud of the jobs we’ve created, the positive impact we’ve made on the UK’s high streets, and the outstanding hospitality our amazing teams have provided since then.

“We are more ambitious than ever and we see Fortress as being an ideal partner to help us take Loungers into the next phase of its growth journey. We believe that the Acquisition represents a compelling proposition for all of our stakeholders and will allow us to execute our ambitious growth plans even more decisively and effectively.”

Domnall Tait, managing director at Fortress, said: “Fortress is pleased to present this offer for Loungers, a company we believe holds a strong and differentiated position in its industry. Loungers’ Directors have delivered impressive increases in the number of locations, same-store sales and revenues over the past several years – in spite of 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 in the opportunity to increase value.

“Fortress brings to the table a successful track record of investing in consumer-focused businesses across the globe, particularly in the UK. For example, Fortress’ investment in Majestic Wines and Punch Pubs & Co. has helped drive the growth of each of those companies. Today’s announcement further strengthens Fortress’ commitment to the UK market, and to being a responsible steward of and investor in UK businesses.

“Fortress has a high conviction in the future of experience-led retail and hospitality, and believes this is highly complementary to Loungers’ business model, strong operational performance, and impressive management team. Fortress looks forward to partnering with Loungers’ management and to providing them with support to drive the business through its next stage of growth.”

Loungers, known for its café bars and restaurants, has been on an expansion trajectory, with 280 sites across its brands.

In a separate update to the market this morning, Loungers announced robust results for the 24 weeks ended 6 October 2024.

It said 17 new sites opened in the period and the company is on-track to open 35 new sites this year and to end FY25 with 292 sites.

The group reported revenue growth of 19.2% at £178,327, reflecting like for like sales growth of +4.7%.
Adjusted EBITDA came in at £29.8m (H1 2024: £23.9m), up 25.0%, while profit before tax was £6m (H1 2024 £3.9m) up 51.3%.

Nick Collins, chief executive of Loungers, said: “The first half of the year has been another period of excellent progress for Loungers, with revenue up 19.2% and adjusted EBITDA up 25.0%. We opened 17 new sites and are on track to finish FY25 with 292 sites across all three brands. As ever, the performance is testament to the quality and flexibility of our all-day offering, the hard work and professionalism of our teams, and the ongoing resilience of the UK consumer.”