The board of Nightcap said it was disappointed its takeover offer for struggling Revolution Bars was rejected and that it was unaware the deal was “incapable of being delivered.”
The statement followed a press release from London-listed Revolution on Tuesday, which said there were “a number of challenges to the delivery” of the Nightcap Proposal, and it described the deal as “highly conditional”.
The owner of Barrio and Blame Gloria chains put forward an offer for the ailing business on 17 May, but it was ultimately turned down.
Commenting at the time, Revolution said: “Following legal advice, the board has concluded that the Nightcap Proposal is incapable of being delivered, which was communicated to Nightcap last week.
“There were a number of challenges to the delivery of the Nightcap Proposal, which was a highly conditional proposal and which was subject to multiple equity fundraisings by Nightcap, assumptions regarding the support of the company’s and Nightcap’s respective lenders, material due diligence, as well as significant time, material cost and potential untested legal and procedural issues”.
However, Nightcap—which wanted to merge the two businesses—said it received legal advice at “no point” suggesting that the non-binding proposal could not be delivered.
“The non-binding proposal did not include a fixed fundraising amount as Nightcap did not receive detailed financial information to help identify the cash requirements of Revolution Bars and the enlarged business until 21 May 2024,” it said.
“The board of Nightcap believes that the Possible Offer, if it had been implemented, would have seen Revolution Bars’ highly dilutive £12.5m fundraising (announced on 10 April 2024) replaced by a merger of the two businesses, allowing for Revolution Bars’ shareholders to suffer less dilution and achieve more value from their investment.”
Revolution raised £12.5m in emergency funding to stay afloat earlier this year.
It follows what has been a challenging few months for the hospitality business, which buckled under the pressure of customers spending less on nights out.
Up to £3m of the investment is being funded by former Pizza Express and Channel 4 chairman Luke Johnson, while another £3m is coming from the German-owned Robus Recovery Fund II and £3.5m from three existing shareholders.
Nightcap added: “Nightcap respects that the board of Revolution Bars wish to pursue a different outcome and as a result Nightcap today confirms that it does not intend to make an offer for the entire issued and to be issued share capital of Revolution Bars.”
City A.M. has contacted Revolution for a comment.