Nightcap has ended its takeover pursuit of Revolution Bars after being told its recent bid was not feasible.
The hospitality business, co-founded by former Dragons Den star Sarah Willingham, offered to buy Revolution, but was turned down last week.
Under Nightcap’s non-binding proposal, Revolution would embark on its planned restructuring strategy, which includes shutting 18 venues and lowering rents on 14 other sites.
Rejected: Hospitality chain Nightcap, co-founded by former Dragons Den star Sarah Willingham (pictured), offered to buy Revolution, but was turned down last week
However, the Manchester-based firm would initiate two separate equity fundraisings instead of the suggested £12.5million announced in April.
Nightcap believed the deal would ensure Revolution Bars investors experienced less dilution of their shares and greater value from their investments.
But Revolution, which runs the Revolucion de Cuba and Peach Pubs brands, claimed the offer was ‘incapable of being delivered’ because funding would not be available in time for the intended launch.
It added that it would create ‘material delivery risk’ because Nightcap would need more time to engage in due diligence before making an acquisition bid.
Nightcap told shareholders on Wednesday that its proposal did not include a fixed fundraising amount and that ‘at no point’ did it receive legal advice saying the offer could not be delivered.
The London-listed group said: ‘Nightcap respects that the board of Revolution Bars wish to pursue a different outcome, and as a result, Nightcap today confirms that it does not intend to make an offer.’
Since its founding during the Covid-19 pandemic, Nightcap has expanded mainly through acquisitions, including cocktail bar chain Dirty Martini, The Piano Works, and Latin American-inspired Barrio Familia.
But like many hospitality businesses, it has since struggled amid consumer cost-of-living pressures.
Despite scoring record sales over the festive period, Nightcap’s like-for-like revenues fell by 10 per cent in the six months ending December, while its pre-tax losses doubled year-on-year to £1.8million.
Responding to the results, Willingham said she anticipated the first half of 2024 to be ‘uncertain and challenging,’ but thought the hospitality sector had endured ‘the worst of this downturn.’
Nightcap shares were flat at 3.9p on mid-Thursday morning, while Revolution Bars Group shares were 2.2 per cent lower at 1.13p.
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