Nightcap withdraws from acquisition of Revolution Bars

Nightcap ended its bid to acquire Revolution Bars after being told its recent offer was unfeasible.

The hospitality company, co-founded by former Dragons Den star Sarah Willingham, offered to buy Revolution but was rejected last week.

According to the non-binding proposal, Nightcap Revolution will begin implementing its planned restructuring strategy, which includes closing 18 facilities and reducing rents in 14 other locations.

Rejected: Hotel chain Nightcap, co-founded by former Dragons Den star Sarah Willingham (pictured), offered to buy Revolution but was rejected last week

However, the Manchester-based company will launch two separate capital raises instead of the £12.5 million suggested in April.

Nightcap believed the transaction would provide Revolution Bars investors with less stock dilution and greater value from their investment.

However, Revolution, which manages the Revolucion de Cuba and Peach Pubs brands, said the offer “cannot be implemented” because funds will not be available in time for the planned launch.

She added that this would create a “material delivery risk” as Nightcap would need more time to conduct due diligence before making a takeover bid.

On Wednesday, Nightcap told shareholders that its proposal did not include a fixed fundraising amount and that “at no point” had it received legal advice stating that the offer could not be implemented.

The London-listed group said: “Nightcap respects that the Revolution Bars board desires a different solution and Nightcap today confirms that it has no intention of making an offer.”

Since its founding during the Covid-19 pandemic, Nightcap has grown primarily through acquisitions, including the Latin American-inspired cocktail bar chain Dirty Martini, The Piano Works and Barrio Familia.

But like many businesses in the hospitality industry, it has since struggled with consumer pressure on the cost of living.

Despite record sales over the Christmas period, Nightcap’s year-on-year revenues fell by 10 per cent in the six months to December, while pre-tax losses doubled year-on-year to £1.8 million.

In response to the results, Willingham said it expected the first half of 2024 to be “uncertain and challenging”, but believed the hospitality sector had weathered “the worst of this downturn”.

Mid-Thursday morning, Nightcap shares were unchanged at 3.9p, while Revolution Bars Group shares were down 2.2% at 1.13p.