Prezzo considers buyout

Shares in AIM-listed restaurant chain Prezzo rose a further 1.35p, or 2.3%, to 55.75p after investors reacted to last night’s news that the company was considering an approach by management to take it private.

Yesterday, the company said that “certain members of its Board have made a preliminary approach seeking permission to explore the possibility of making an offer for the company.” This is widely believed to be the Kaye family, who founded the chain and retain 60% of it.

Prezzo said the company would form an independent committee of directors to assess any bids.

Broker Dresdner Kleinwort noted that the shares had halved over the past year despite a 4.2% rise in earnings forecasts. Therefore “a deal is not overly surprising”. It added that an offer could be made at eight times EBITDA, which is below the long term average for restaurants of nine times.

Last year Prezzo, which has 130 restaurants, saw EBITDA rise 25% to £13.6m on sales up 29% to £70.1m. That would suggest a putative deal value of £109m (US$218m) according to Dresdner Kleinwort’s calculations.