- The founder of Nightcap is former Dragons Den star Sarah Willingham.
- Revolution’s current restructuring strategy includes the closure of 18 locations
Revolution Bars has rejected a proposed takeover by hotel chain Nightcap, saying it is “undeliverable”.
The London-listed firm confirmed earlier this month that it had been discussing a potential acquisition deal with Nightcap, whose founder is former Dragons Den star Sarah Willingham.
Under Nightcap’s proposal, Revolution would implement its current restructuring strategy, which includes closing 18 locations and reducing rents at 14 other locations.
Acquisition Talks: Revolution Bars confirmed earlier this month that it had been talking about a potential acquisition deal with Nightcap.
However, the company would participate in two separate equity fundraisings rather than the £12.5m fundraising announced in April.
Revolución said the non-binding offer is unviable because the funds would not be available in time for the planned launch.
He added that Nightcap would need more time to conduct due diligence before making a takeover offer, “thus creating a significant delivery risk.”
“Following legal advice, the board concluded that Nightcap’s proposal cannot be carried out, which was communicated to Nightcap last week,” the Manchester-based company said.
But the company said it “remains open to considering” any future offer from Nightcap once the restructuring plan is finalized and it has been sufficiently recapitalized.
Revolution, which runs the Peach Pubs and Revolución de Cuba brands, has seen demand slow in recent years due to Covid-related restrictions and cost of living pressures affecting the hospitality sector.
Rising energy costs led the company to close its locations on Mondays and Tuesdays.
Dan Coatsworth, investment analyst at AJ Bell, said: ‘The biggest issues, beating in the background like an insistent rhythm, are the rising costs and falling demand facing this sector of the hospitality industry.
“Fewer and fewer young people are in the habit of going out drinking regularly, which means nightlife operators have to come up with new ways to keep people coming to their venues.”
Revolución has also blamed the increase in people working from home for affecting Friday sales and successive rail workers’ strikes for damaging trade at its city center outlets.
Despite enjoying a strong performance over Christmas, Revolution cut its profit forecasts in January due to weak post-festive sales and inflation-busting increases in business rates and wage costs.
And last month, trading in its shares on the AIM junior market was suspended after it failed to publish its half-year results on time.
Revolution Bars Group Shares They were down 4.6 per cent to 1.43 pence on Tuesday morning and have fallen around 73 per cent since the start of the year.