British coffee house brand, Caffé Nero, has reportedly rejected an acquisition bid from EG Group’s Issa brothers. The offer was reportedly made by the duo on Sunday. However, given that Caffé Nero is in search of a rescue deal approval that would bring rent cuts following the drop in sales due to the lockdown period, it decided to reject the bid and make further advancements towards its plan.

The Issa brothers, known for their petrol forecourt enterprise EG Group, have also been reported to buy the grocer Asda. Under the takeover bid for Caffé Nero, the coffee chain’s landlords would have been entirely paid for any rental arrears, add sources with knowledge of the matter.

However, according to a statement by Caffé Nero, the proposed bid seemed like it had a clear intention of effectively disrupting the CVA (Company Voluntary Arrangement) process. The company further stated that the move could be a forerunner to the Issa brothers’ opportunistic acquisition of Caffé Nero at a future date. As the CVA process is being supported by the coffee chain’s external investors, its lenders have not requested any alteration in strategy and its shareholders have decided to dismiss the offer, added Caffé Nero.

As per sources, Caffé Nero owns 150 Harris & Hoole coffee shops and 650 own-brand stores and has been hit hard by the decreased number of customers during the COVID-19 pandemic. This scenario has, therefore, prompted the company to resort to a type of rescue deal called CVA (Company Voluntary Arrangement), whereby some of the company’s stores would be shut and rents would be cut on others.

Caffé Nero’s takeover would be an obvious expansion of the Issa brother’s EG Group enterprise. The EG Group runs 6,000 petrol forecourts in Australia, Europe, and the US and has already established brand collaborations with several enterprises such as KFC and Starbucks.

Source credit: https://www.bbc.com/news/business-55130053