Lack of appetite for hospitality drives Gaucho private
The lack of popularity for the hospitality sector on the stock exchange has driven another
company to go private.
A management team from bar-restaurant group Gaucho Grill,
formerly Gioma Restaurants, has launched a buyout valuing the company at £22.3m.
The directors
blamed the poor value of shares on the stock market, which makes it difficult for businesses to raise
money for expansion.
The company also issued a profits warning because trade has been hit by
foot-and-mouth disease, the rising cost of beef and continuing fears about BSE.
Other companies
have been leaving the stock exchange because of poor share ratings, such as Ambishus Pub Company and
Manchester brewer Joseph Holt.
A Gaucho spokesman said: "The capital markets have not for some
time favoured companies of Gaucho's size operating in Gaucho's sector.
"As the management team
does not believe this situation is likely to alter in the near future, the company would be more
suited to the private sector."
The company owns two brands, the Gaucho Grill, an
Argentine-style restaurant, and Down Mexico Way, a Latin-themed restaurant and bar concept.
The group has increased the number of restaurants from 29 in 1999 to 36. Apart from eight in the
UK, it also has 21 in the Netherlands and seven in Switzerland.
In February, it was tipped as
a potential buyer of Whitbread's 65-strong Maredo chain of steakhouses in Germany, but no deal has
materialised.
Announcing the management buyout offer today (July 2), Gaucho Grill also warned
that its results for the year to the end of 2001 would be below market expectations.
"In common
with other operators in Gaucho's market, trading in the past few weeks has been adversely affected
by the recent outbreak of foot-and-mouth disease and concerns about BSE in Europe," the company
said.
"Argentine beef imports have been temporarily banned and consumer sentiment towards
beef has turned negative."
The company's margins have also been hit by the cost of beef which
has "substantially increased".
The management buyout team is made up of chairman and chief
executive Zeev Godik, finance director Steve Van Tongeren and executive director Jan Geenamans.
Related stories:
Ambishus makes plan to go private (August 2, 2000)
Barracuda to bite £16.1m Ambishus (September 28, 2000)
