Under the terms of the acquisition, each Loungers shareholder will be entitled to receive 310p in cash for each share, with an alternative option to participate in an unlisted share alternative in respect of some or all their Loungers shares.
The cash offer represents a premium of approximately 30.3% to the closing price of 238p per Loungers share on 27 November 2024.
It comes as Loungers, whose portfolio includes the Lounge, Cosy Club and Brightside brands, reports total revenue in the 24 weeks to 6 October 2024 of £178.3m, up 19.2% on the previous year (£149.6m).
Adjusted EBITDA rose 25% to £29.8m (2023: £23.7m) while pre-tax profits reached £5.95m, a rise of 51.3% on the previous year.
In a trading update in early October, the group said it was ‘continuing to outperform the broader UK hospitality market’.
“We remain very confident about Loungers’ future prospects and the half year results that we announced separately today clearly demonstrate the strong momentum that we have in the business,” says Alex Reilley, the chairman of Loungers.
“Loungers has come a long way since we opened our first site in Bristol in 2002, and we are hugely proud of the jobs we’ve created, the positive impact we’ve made on the UK’s high streets, and the outstanding hospitality our amazing teams have provided since then.”
As of 27 November 2024, Loungers had a total of 280 sites in its portfolio across its three brands with the group having opened a record 36 sites in its most recent financial year.
According to Fortress, the group’s directors expect to continue to open around 36 new sites per annum.
“We are more ambitious than ever and we see Fortress as being an ideal partner to help us take Loungers into the next phase of its growth journey,” continues Reilley.
“We believe that the acquisition represents a compelling proposition for all of our stakeholders and will allow us to execute our ambitious growth plans even more decisively and effectively.”
Fortress’s UK portfolio also includes Punch Pubs, Majestic Wines, and Vagabond.
“Fortress is pleased to present this offer for Loungers, a company we believe holds a strong and differentiated position in its industry,” says Domnall Tait, managing director at Fortress.
“Loungers’ directors have delivered impressive increases in the number of locations, same-store sales and revenues over the past several years – in spite of the recent challenges faced by the wider hospitality sector.
“This growth, and management’s continued commitment to the business, give us confidence in the company’s growth potential and in the opportunity to increase value.
“Fortress brings to the table a successful track record of investing in consumer-focused businesses across the globe, particularly in the UK. For example, Fortress’ investment in Majestic Wines and Punch Pubs & Co. has helped drive the growth of each of those companies.
“Today’s announcement further strengthens Fortress’ commitment to the UK market, and to being a responsible steward of and investor in UK businesses.
“Fortress has a high conviction in the future of experience-led retail and hospitality, and believes this is highly complementary to Loungers’ business model, strong operational performance, and impressive management team.
“Fortress looks forward to partnering with Loungers’ management and to providing them with support to drive the business through its next stage of growth.”
