News

City Centre in merger talks with Ask Central, wants its pizza chains

November 12, 2003

LONDON—U.K.-based restaurant chains Ask Central PLC and City Centre Restaurants announced on Nov. 12 that they're in merger talks.

According to Dow Jones Newswires, Ask, which owns the Ask Pizza and Pasta and Zizzi's Pizza chains, would technically be purchased by City Centre with cash and shares of stock. The report said the price paid to Ask would be a premium.

During early trading on Nov. 13, Ask's and City's shares rose modestly on word of the news.

The merger would create a company with 400 restaurants, including City Centre's 250 units (casual dining Frankie and Benny's brand, Garfunkels and Caffe Uno) with Ask's 150 pizza and pasta restaurants.

This won't be City Centre's first venture into the pizza business. It once owned 49 Deep Pan Pizza units, but sold them in 2002 (see related story City Centre sells 49 Deep Pan Pizza Sites).

For two years Ask Central has outperformed its chief rival, PizzaExpress, which was delisted and taken private in July by Gondola Express, a venture capital group, which owns the Nando's chicken chain.

Greg Feehely, an analyst at Altium Capital, told Dow Jones Newswires that Ask is a stronger business than City Centre, and that the addition of Ask's brands would benefit it nicely. Ask's pizza units are more profitable than City Centre's restaurants, which Feehley believes will push earnings per share to more than double that of City Centre's in 2004.

Ian Berry, an analyst at Durlacher, said it's unlikely other bidders will approach Ask.

According to a report in The Independent, Ask Central founders Adam and Sam Kaye (chief executive and operations director respectively) will remain involved in the business, though it's unclear what their roles will be.

This year the pair sold 6 million shares in Ask, reducing their stakes to just below 4 percent each.