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

Loungers, which went from a single café-bar set up by three friends in Bristol for £10,000 to a nationwide chain, is to sell for £351m.

The hotel group, which has 292 venues across the UK under the Lounge, Cozy Club and Brightside brands, has agreed to an acquisition by US private equity giant Fortress Investment Group.

The 310 pence per share offer, which is a 30.3 per cent premium to Loungers’ closing price of 238 pence on Wednesday, sees Fortress take another slice of the UK hospitality industry and Loungers positioned for a greater growth.

Alex Reilley, co-founder and president of Loungers, which also operates the Brightside and Lounge brands, said the deal “will allow 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 venues across the UK and hopes to expand the portfolio to at least 600 sites.

The trio could make a fortune with their initial investment of just £10,000.

Loungers told shareholders in a joint statement Thursday that its share price, which has now hit an all-time high, “has not adequately reflected” the company’s performance.

Sunbed actions it soared 28.4 per cent to 305.55 pence in early trading, having previously added just 3.5 per cent since its listing in May 2019.

Loungers posted a pre-tax profit of almost £6m for the six months to October 6, up 51.3 per cent year-on-year, while revenue soared 19.2 per cent to £178m thanks to their expansion efforts.

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

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

The company, whose attempted £6.7bn takeover of Morrisons was defeated in 2021, had $48bn in assets under management at the end of last year.

Domnall Tait, chief executive of Fortress, said the investment group “brings a successful track record of investing in consumer-focused companies around the world, particularly in the UK”.

He added: “Today’s announcement further strengthens Fortress’ commitment to the UK market and to being a responsible steward and investor in UK businesses.”

Reilley said: “Loungers has come a long way since we opened our first site in Bristol in 2002, and we are very proud of the jobs we have created, the positive impact we have had on the UK’s high streets and the excellent hospitality we have our incredible teams have delivered ever since.

“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 journey.”