finance

Billionaire Issa brothers make bid for struggling Caffè Nero


The billionaire brothers behind EG Group, a chain of petrol filling stations, have made a bid for the struggling coffee shop chain Caffè Nero.

Mohsin and Zuber Issa are understood to have written to Caffè Nero at the weekend to offer to buy the chain from its founder and main shareholder, Gerry Ford. The business has 800 cafes and employs more than 6,000 people in the UK.

Under the EG Group proposal, which was first reported by Sky News, EG would pay in full the rent owed to Caffè Nero’s landlords in the wake of the Covid-19 pandemic. Like other hospitality firms, the chain has been hammered by the forced closure of the business during the first Covid-19 lockdown and the conversion to a takeaway-only business in parts of the UK through the autumn.

The firm, which owns 650 Caffè Nero-branded stores, 40 Harris + Hoole cafes and 100 Coffee#1 sites, appointed KPMG in September to help it negotiate rent cuts with its landlords. Landlords were due to vote on a company voluntary arrangement (CVA) later on Monday – a form of insolvency that allows retailers to reduce rent and shut shops.

The bid from EG Group could stave off the CVA and would be a much better outcome for landlords, sources said, but cautioned that it is at an early stage.

The Issa brothers, from Blackburn in Lancashire, made their fortunes building EG Group (founded in 2001 as Euro Garages) into a major business that runs 6,000 filling stations in Europe, the US and Australia. It has partnerships with Starbucks and KFC.

Backed by the private equity firm TDR Capital, the billionaire brothers are buying Leeds-based Asda, Britain’s third-largest supermarket chain, from the US retail giant Walmart for £6.8bn. Walmart will retain a minority stake.

Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk

However, questions were raised over EG Group’s finances when its auditor Deloitte suddenly quit in October, reportedly because of governance concerns, and was replaced by KPMG. EG Group posted revenues of €20bn (£18bn) and a pre-tax loss of €82m last year.

Caffè Nero was founded in 1997 by Ford as an Italian-style coffee chain in London. Before the pandemic, it had more than 1,000 cafes in the UK and 10 other countries ranging from the US and Sweden to Oman, and served 135 million customers a year.

Ford, who is also chief executive of the chain, recently said that Caffè Nero had worked hard to adapt to the situation by expanding its coffee at home range, launching click and collect via its app and offering a delivery service through Uber Eats.



READ SOURCE

Leave a Reply

This website uses cookies. By continuing to use this site, you accept our use of cookies.  Learn more