Deckchairs in £350m takeover: from a Bristol cafe set up by three friends with £10,000, to a huge bid for US private equity

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

The hospitality group, which has 292 locations in the UK under the Lounge, Cozy Club and Brightside brands, has agreed to a takeover by US private equity giant Fortress Investment Group.

The offer of 310p per share, which is a premium of 30.3 percent to Loungers’ closing price of 238p on Wednesday, sees Fortress take over a new part of the UK hospitality sector 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 enable 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 location in Bristol, Loungers now has 292 locations across the UK and hopes to expand the portfolio to at least 600 locations.

The trio could make a fortune from 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 a record high, “has failed to adequately reflect the company’s performance.”

Shares sun loungers rose 28.4 percent to 305.55p in early trading, having previously risen just 3.5 percent since listing in May 2019.

Loungers made pre-tax profits of almost £6m for the six months to October 6, up 51.3 per cent year-on-year, while sales shot up 19.2 per cent to £178m thanks to its expansion efforts.

Reilley said: ‘We remain very confident in the future prospects of Loungers and the half-year results we announced separately today clearly demonstrate the strong momentum we have in the industry.’

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

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

Domnall Tait, managing director of Fortress, said the investment group has “a successful track record of investing in consumer-facing businesses around the world, particularly in the UK”.

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

Reilley said: ‘Loungers have come a long way since we opened our first site in Bristol in 2002, and we are immensely proud of the jobs we have created, the positive impact we have made on Britain’s high streets and the excellent hospitality that our wonderful teams have provided since then.

“We are more ambitious than ever and see Fortress as an ideal partner to help us take Loungers to the next phase of its growth trajectory.”