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Twigway withdraws bid to buy PizzaExpress

November 19, 2002

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LONDON -- Multiple news sources are reporting that venture capital group Twigway will not purchase PizzaExpress.

Hugh Osmond, who took PizzaExpress public nine years ago along with former partner Luke Johnson, spearheaded Twigway's £250 million (U.S. $397 million) bid for the 300-store chain on Nov. 4. According to a Dow Jones Newswires report, however, a PizzaExpress representative said the deal collapsed in part because of an "onerous" payment demanded by Twigway as a precondition to entering formal talks.

Another report by Ananova.com said Osmond was dissatisfied that Credit Suisse First Boston, PizzaExpress' financial advisers, hadn't provided him full access to the chain's books.

Word of the deal's death sent Pizza Express' shares plummeting 14 percent to trade at 300 pence (U.S. $4.77).

Rumors have circulated this week that Johnson may launch a bid for PizzaExpress (See story "Johnson rumored to be bidding for PizzaExpress") through Hawkpont Partners, but the chain said it has received no other bids

Twigway's offer of between 330 and 350 pence (U.S. $5.25 to $5.56) per share was considered low by some UK stock watchers. According to the Dow Jones report, Teather & Greenwood analyst Nigel Popham predicted the absence of bidders will keep the stock's price low and that additional offers are unlikely to materialize in the short term.

Gerrard analyst David Liston believes PizzaExpress won't attract other bidders anytime soon unless the company's stock price and financial outlook improve. Until then, he thinks its share price could drop at least another 10 percent.

PizzaExpress, once a High Street darling, has struggled (See story "Sales slide at PizzaExpress ...") for more than a year against negative comparable-store sales trends at its stores in London. Those sites are heavily dependent upon tourist traffic, which fell dramatically after last year's terrorist attacks on the U.S.

Sales at the company's suburban stores have fared much better, and grocery store sales of PizzaExpress frozen pizza have been positive as well. But the company faces a long-term store restaurant refurbishment project that will require tens of millions of dollars and at least three years to complete.