The billionaire brothers behind the petrol station enterprise EG Group have snapped up the quick meals chain Leon Eating places for £100m, simply months after buying grocery store chain Asda.
EG Group, run by Mohsin Issa and Zuber Issa, has purchased the 70-strong restaurant chain, which was based in London in 2004 by John Vincent, its chief government, Henry Dimbleby, Boris Johnson’s national food tsar, and the chef Allegra McEvedy, each of whom left the enterprise just a few years later.
The deal will result in payouts for the trio: Vincent, who’s leaving, stands to make £15m from his 15% holding in Leon, which is known as after his father, whereas different personal shareholders, together with the opposite two founders, maintain 15% between them.
Leon, which employs 700 individuals, was majority-owned by two personal fairness companies, Lively Companions and Spice Private Equity, with stakes of 30% and 40% respectively.
Vincent and Dimbleby, advocates of wholesome consuming, coined the idea of “naturally quick meals” for Leon, and likewise developed a faculty meals plan for the federal government in 2013. They met on the administration consultancy Bain and Firm, the place they bonded over a “dislike of pre-made sandwiches served from neon-lit chiller cupboards,” according to the Leon website.
Final July, Dimbleby’s report on a new national food strategy, commissioned by the federal government, really helpful that as much as 1.5 million extra youngsters in England ought to get free college meals to assist deal with a rising disaster of meals poverty and unhealthy consuming.
The Issa brothers, who leased their first petrol station in 1999 and now have greater than 6,000 throughout 10 international locations, have been on a shopping for spree, including extra meals companies to their portfolio. They agreed to acquire Asda for £6.8bn last October, though the takeover nonetheless must be accepted by the competitors watchdog, with a call due on Tuesday, and have bid for Caffè Nero. They’d even hoped to purchase the style chain Topshop.
In January, EG recruited the former Marks & Spencer boss Stuart Rose as chair, to spice up its company credentials at a time of fast enlargement, which has landed the corporate with greater than £7bn of debt. In October, the group’s auditors, Deloitte, resigned, fuelling issues about EG’s governance and administration.
Leon has 42 company-owned eating places in London and different giant cities within the UK, in addition to 29 websites run by franchisees at transport hubs, primarily airports and railway stations, throughout the UK, the Netherlands, Eire, Norway, Spain and Switzerland.
Solely six shops are in service stations, a quantity that’s set to rise underneath Leon’s new homeowners. EG plans to open round 20 Leon websites a yr from 2022, together with various drive-throughs.
Blackburn-based EG, which is 50/50 owned by the Issa brothers and the personal fairness group TDR, already runs greater than 700 meals shops within the UK and Eire. As franchise operators, the Issas have been putting in Starbucks, KFC, Burger King, Greggs, Cinnabon and Subway branches at their forecourts, and opened the UK’s first Starbucks drive-through in 2010. They mentioned: “Leon is a improbable model that we have now lengthy admired.”
EG has dedicated to protecting on Leon’s workers and administration staff, and also will maintain on to its headquarters in Copperfield Road, London, for a minimum of 12 months.
Vincent mentioned: “In some methods it is a unhappy day for me, to half firm with the enterprise I based 17 years in the past in Carnaby Road.” He mentioned he had bought to know the Issa brothers through the years, and was “assured underneath the brand new possession, the model will flourish and have even better enchantment to a broader buyer base, particularly exterior of London”.
EG can be regarded as closing in on Caffè Nero, after shopping for up a number of the struggling espresso chain’s money owed. It has purchased round £140m price of loans from Swiss personal fairness agency Companions Group by way of the funding financial institution Morgan Stanley, the Sunday Telegraph first reported. If Caffè Nero defaults on its money owed, EG could be in place to take management. The chain additionally has £145m of senior financial institution debt that falls due subsequent yr.
Companions is known to have written to Caffè Nero boss Gerry Ford, expressing issues over its funds, together with whether or not the espresso store chain, which has not filed accounts virtually 11 months after its year-end, can proceed as a going concern.
Nonetheless, Caffè Nero mentioned: “Now we have had a profitable winter and spring buying and selling and are producing optimistic cash-flow and are forward of forecast for the final 5 months. We’re forecasting no covenant points in our projections over the following 12 months and we look ahead to a fair brighter future publish 17 Might 17 after we open up our cafes totally to the general public.”
EG’s bid for the 800-strong espresso store chain was rejected in November and Caffè Nero filed as an alternative for an organization voluntary association, a type of insolvency that permits retailers to chop rents and shut shops. The CVA was handed with backing from most Caffè Nero landlords, however 9, largely smaller landlords, had been sad and filed a authorized problem funded by EG. Eight are understood to have settled with Caffè Nero however one nonetheless desires to go to court docket. EG declined to remark.