Loungers in £350m takeover: From a Bristol cafe arrange by three pals with £10,000 to large US personal fairness bid

Loungers, which has grown from a single cafe-bar set up by three friends in Bristol with £10,000 into a nationwide chain, is set to be sold for £351million.

The hospitality group, which has 292 venues across the UK under the Lounge, Cosy Club and Brightside brands, has agreed a takeover by US private equity giant Fortress Investment Group.

The 310p per share offer, which is at a 30.3 per cent premium to Loungers’ closing price of 238p on Wednesday, sees Fortress take another chunk of the UK hospitality industry and Loungers position itself for further growth.

Co-founder and chairman of Loungers, which also operates the Brightside and Lounge brands, Alex Reilley said the deal ‘will allow us to execute our ambitious growth plans even more decisively and effectively’.

Launched in 2002 by Reilley, David Reid and Jake Bishop initially with just one Bristol location, Loungers now has 292 venues across the UK and hopes to build the portfolio to at least 600 sites.

The trio could be set to make a fortune on their initial investment of just £10,000.  

Loungers told shareholders in a joint statement on Thursday that its share price, which has now risen to an all-time high, have ‘failed to adequately reflect’ the firm’s performance.

Loungers shares soared 28.4 per cent to 305.55p in early trading, having previously added just 3.5 per cent since listing in May 2019.

Loungers posted a pre-tax profit of almost £6million for the six months to 6 October, up 51.3 per cent year-on-year, as revenues rocketed 19.2 per cent to £178million thanks to its expansion efforts.

Reilley said: ‘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.’

Fortress Investment Group, which is majority owned by Mubadala Investment Company after a deal with former owner Softbank last year, has previously invested in UK hospitality with the acquisition of Majestic Wines and Punch Pubs & Co.

The firm, whose £6.7billion Morrisons takeover attempt was defeated in 2021, had $48billion in assets under management at the end of last year.  

Domnall Tait, managing director at Fortress, said the investment group ‘brings to the table a successful track record of investing in consumer-focused businesses across the globe, particularly in the UK’.

He added: ‘Today’s announcement further strengthens Fortress’ commitment to the UK market, and to being a responsible steward of and investor in UK businesses.’

Reilley said: ‘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.

‘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.’