Hostmore abandons bid to acquire TGIF
However, TGI Fridays and Hostmore have agreed that each is open to re-engaging discussions if circumstances warrant.
Hostmore has abandoned its plans to acquire TGI Fridays over legal issues.
The news comes after the board confirmed that TGI Fridays lost control of TGIF Funding, which holds legal title to the franchise agreement royalties and other various fees and revenue from intellectual property of the TGI Fridays business.
According to Hostmore, while TGI Fridays remains the owner of the residual interest in TGI Funding, the termination compromises the control over the royalty stream of TGI Fridays and also “potentially impairs the future revenue of the business”.
It added that the “predictable and highly cash generative royalty stream” of TGI Fridays was the primary attractive feature for the group in pursuing the acquisition.
However, even though the acquisition is no longer being actively pursued, TGI Fridays and Hostmore have agreed that each is open to re-engaging discussions if circumstances warrant.
In April 2024, Hostmore reached an agreement for an all-share acquisition of TGI Fridays for £177m, including the business’ brand in the US which is the company’s franchisor.
Its sales for the first three weeks of July declined 23% on a like-for-like (LFL) basis compared with the same period in 2023. The same factors affecting the sector in July continued into August, namely persistent warmer weather than the comparative period in 2023 and underlying weak consumer spending.
The group’s year-to-date LFL sales also remained at a decline of 12% compared with the same period in 2023, with August performing better than July and the first two trading weeks of September showing further improvement, with LFL sales at a decline of around 9% compared with the same period in 2023.
