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Hostmore has said it has dropped plans to buy TGI Fridays in the US for £177 million, leading its shares to tank by more than 90%.
The deal was set to see Hostmore, which runs 87 restaurants in the UK, merge with US-based TGI Fridays Inc, to create a larger firm that will remain listed in London.
It described the two businesses as a “natural fit” and which had been combined until 2014.
But on Monday, Hostmore said it was no longer pursuing a takeover following a management change which means it would no longer be able to collect royalties from the TGI Fridays brand.
This could impact the future revenue of the business, with the royalty stream being the main attractive feature for Hostmore in pursuing the deal, it said.
Hostmore has said it has dropped plans to buy TGI Fridays in the US (Lynne Cameron/PA)PA ArchiveWhile it is no longer actively pursuing an acquisition, the two firms said they were “open to re-engaging discussions” in the right circumstances.
Meanwhile, Hostmore is in the process of selling its UK restaurants to new owners, as it looks to become a fully franchise-operated model.
The process, which is expected to complete by the end of the month, is predicted to result in Hostmore being wound up and delisted from the London Stock Exchange.
Shares in the firm had dropped by more than 90% on Monday morning, after it also said it was not expecting to “recover any meaningful value” from the sale of stores.
The 87 TGI Fridays restaurants in the UK, which have a New York-influenced food and cocktails menu, continue to stay open as normal.
The brand’s biggest market is in the US where there are 128 sites, including franchised stores, as well as more than 270 in countries around the world.
Last year, total global restaurant sales hit 1.4 billion dollars (£1.1 billion).
Hostmore also revealed that UK sales have fallen by more than a 10th this year, compared with last year.
Over the first three weeks of July, sales dropped by nearly a quarter compared with the same period in 2023, as it was affected by warmer weather resulting in fewer visitors and continued weaker consumer spending.
