Billionaire Issa Brothers launch daring Caffè Nero takeover bid

EG Group, the petrol retailing giant led by billionaire Issa brothers, has launched a takeover offer for troubled coffee chain Caffe Nero.

Over the weekend, Moshin and Zuber Issa wrote to the ailing retailer, proposing to buy the company from Gerry Ford, founder and controlling shareholder, Sky News first reported.

Under the proposal, Caffe Nero's landlords would be paid in full for the rent arrears owed to them as a result of the COVID-19 health crisis, the broadcaster said.

The bid could force the chain, which owns 650 own-brand stores and 150 Harris & Hoole coffee shops, to postpone the company voluntary agreement (CVA) vote it has scheduled for Monday evening, insiders close to the matter said.

Earlier this month Caffe Nero launched a CVA as part of a restructuring plan after COVID-19 and the second lockdown pushed it into a corner.

Ford said at the time that it was “imperative” that the business takes steps to reduce pressure, as its cafes were forced to close for a second time.

“Like so many businesses in the hospitality sector, the pandemic has decimated trading, and although we had made significant progress in navigating the financial challenges of the first lockdown, the second lockdown has made it imperative that we take further action,” he said.

The privately owned group, which is one of the biggest coffee shop operators in the UK, employs around 5,000 staff.

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Further details about the consequences of a CVA, including numbers of job losses or shop closures, were not confirmed at the time. However, restructuring experts from KPMG, Will Wright and David Costley-Wood, were called in to handle the process.

A CVA is a formal agreement between a business and its creditors which gives firms the chance of recovery. It sets out how repayments of company debts should be made to creditors and can deliver a better outcome than an administration or liquidation. After 14 days creditors are asked to vote and at least 75pc must agree.

A source close to EG Group said the EG offer was a significant improvement on creditors’ plans to launch a CVA. EG Group runs 6,000 petrol forecourts in Europe, the US and Australia, and has brand partnerships with companies such as Starbucks and KFC.

CVAs have become increasingly popular over the last few years as Britain’s high street suffers from declining footfall, increased business rates and the rise of online shopping. The coronavirus pandemic has only heightened the issues retailers are facing.

The news comes weeks after the billionaire brothers landed a £6.8bn deal backed by private equity company TDR Capital to buy supermarket chain Asda from US owner Walmart (WMT).

The move means the grocer will return to majority UK ownership for the first time in two decades.

The Lancashire-based brothers, who started their business 20 years ago, were both made CBEs on the back of the news.

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