Caffè Nero has rejected a takeover bid from the petrol station entrepreneurs who recently agreed a deal to buy supermarket chain Asda.
Sky News revealed earlier that Mohsin and Zuber Issa, the billionaire brothers behind EG Group, made the offer over the weekend to the ailing coffee chain’s founder and controlling shareholder Gerry Ford.
The approach came on the eve of Caffè Nero seeking approval from landlords to slash its rent bills in a company voluntary arrangement (CVA) process.
Mohsin Issa (l) and Zuber Issa are the brothers behind petrol retailer EG group
Under the Issa brothers’ proposal, landlords would be paid in full for the rent arrears owed to them as a result of the COVID-19 crisis.
That was said to represent a better deal for them than under the CVA.
The CVA plan would eventually see a number of Caffe Nero’s 650 stores close, though the main focus is to switch to a turnover rent model – linking store rents to sales.
Caffè Nero gave a frosty response in a statement responding to an “unsolicited” offer for the brand’s parent group.
The coffee chain’s directors said they believed the bidder’s plan was to “disrupt the CVA process currently underway as a precursor to opportunistically acquiring the company at a later date”.
“Having considered carefully whether progressing with this unsolicited, highly uncertain approach has the potential to achieve a better result for creditors than the CVA as currently proposed, they do not believe this to be the case or to be in the long term interests of the group,” the company said.
The brothers and their private equity backers have agreed a deal to buy Asda
“This offer has been made without any understanding of Caffè Nero’s financial and trading position.”
Caffè Nero said the CVA proposal was designed to put the group “on a sustainable footing for the medium to long term” and provide the company “with the flexibility required for it to withstand the devastating impact of the current pandemic, and any further subsequent lockdowns”.
It added that lenders had indicated their support for the CVA process.
“The lenders are aware of the approach referred to above and have not requested a change in strategy and shareholders have undertaken to reject the offer,” the statement said.
Like rivals such as Pret a Manger, Caffè Nero, which employs more than 5,000 people, has been badly hit by the reduced footfall in city centres as millions of Britons continue to work from home.
The Issa brothers’ EG Group, which runs 6,000 petrol forecourts in Europe, the US and Australia, already has brand partnerships with the likes of Starbucks and Burger King.
In September, the brothers and their private equity backers, TDR Capital, secured an agreement with Walmart to buy supermarket chain Asda for £6.8bn.