Gondola stays quiet on Cinven bid

Italian restaurant chain Gondola has refused to recommend the mooted offer from private equity bidder Cinven.

The group, which owns the Pizza Express and ASK Central chains, reported a 4.1% increase in like-for-like sales to £360.5m, producing a 5.3% rise in pre-tax profits to £33.6m. Since the year-end, like-for-like sales have improved by a further 7.1%. However, chairman David Ross refused to be drawn on whether the company was about to recommend the Cinven bid, made through purpose-built vehicle Paternoster Acquisitions.

On September 12 Cinven said it was considering a possible offer at 415p a share. That would value Gondola at £560m (US$1bn).

Current investors TDR and Capricorn have already said they would accept such an offer, but only for 25.1% of the shares. That is just over half their combined 48% holding. Cinven’s offer will include the 4.7p final dividend declared last week.

TDR and Capricorn were behind last year’s flotation of Gondola at 320p, having acquired the business following the buyout of PizzaExpress in 2003.

Cinven is being advised by Citigroup and is currently conducting due diligence on Gondola’s business. The private equity group said it would only proceed with the blessing of Gondola’s board.

Reports have said that Cinven plans to expand Pizza Express and ASK outside the UK and might also acquire other outlets such as the Restaurant Group.

Gondola shares stand at 406.5p, below Cinven’s mooted offer price. Analyst Mark Brumby of Oriel Securities still said a take-out by Cinven was “most likely”.

The deal values Gondola at 10.1 times earnings before interest, tax, depreciation and amortisation. That equates to £1.7m per restaurant, according to Brumby’s calculations.