Thu 6th Nov 2014 - Prezzo board accepts bid from TPG to go private Prezzo board accepts bid from TPG to go private: Restaurant chain Prezzo’s board has accepted a cash bid from TPG Funds, which has set up a vehicle called Papa Bidco, to take the company private. Under the terms of the deal, each Prezzo shareholder will be entitled to receive 126.5p in cash for each Prezzo share, which values Prezzo at approximately £303.7m. The transaction values the company at: 9.9 times Prezzo’s reported adjusted Ebitda of £28.9 million for the financial year ended 29 December 2013; 9.2 times Prezzo’s reported adjusted Ebitda of £31.0 million for the twelve months ended 29 June 2014; and 18.5 times Prezzo’s reported adjusted diluted earnings per share of 6.85 pence for the financial year ended 29 December 2013. TPG is a leading global private investment firm founded in 1992 with $66 billion of assets under management. TPG has invested in a number of food and food service companies globally including Del Monte, Chobani and Ingham, and has been a long-term investor in Burger King. Papa Bidco has received irrevocable undertakings from each of the Prezzo directors and the Kaye family, who between them old around 62.33% of the company’s shares. Commenting on the transaction, Abel Halpern, partner of TPG, said: “The Prezzo story is one of consistent and robust growth, driven by a business model based on operational excellence. We look forward to taking Prezzo to the next level and optimising the company’s full potential.” Michael Carlton, chairman of Prezzo, said: “Since the business was founded in 2000, the Kaye family and management have built Prezzo into a successful UK casual dining business with 249 restaurants. To continue to maximize the growth of the business, the board has concluded that new skills, infrastructure and investment will be required and we are pleased to recommend the Bidco offer, which is in the interest of all shareholders.” A document outlining the background to the bid states: “After nearly 14 years running Prezzo, Jonathan Kaye and the other members of the Kaye family are keen to realise their investment in the business in a timely and appropriate manner, without compromising its long term future and in a way that delivers value to all Prezzo shareholders. The limited liquidity in the Prezzo shares is likely to limit the ability of the Kaye family to realise their investment through the public markets without adverse effects to the Prezzo share price due to concerns about succession and the creation of an overhang. As a result the company appointed Altium to explore potential interest in an acquisition of Prezzo which would give all Prezzo shareholders the opportunity to realise the value of their Prezzo shares alongside management and the Kaye family. As part of this process Altium engaged with a number of potential purchasers to assess their appetite for an acquisition of Prezzo. Throughout this process the Prezzo board was conscious of the potential disruption to the business and, given the exploratory nature of the initial discussions, took the decision not to announce a formal sale process. Following a period of interaction with a range of different parties, proposals were received from two potential purchasers, Advent International plc and TPG. In light of the commercial considerations outlined above, the board agreed to allow both parties access to information on the Company in order to further develop their proposals and to establish whether the terms of a recommendable offer could be agreed. On 2 October 2014 the fact that Prezzo was in discussions with Advent International plc and TPG and that any offer was unlikely to be at a premium to the prevailing share price was made public. This announcement did not lead to any new approaches from interested parties. Following a period of due diligence and further discussions with both Advent International Plc and TPG, and after due consideration, the board has decided that the acquisition by Bidco, a newly-incorporated company indirectly owned by the TPG Funds, is in the best interests of all Prezzo shareholders.”