Loungers is the subject of a cash bid of 310p. The implied valuation of 7.8x EV/EBITDA (pre-IFRS16) is on the low side we feel. We see fair value closer towards 9x, implying 375p and recommend shareholders reject this initial offer. Interims today are strong with sector leading LFL’s (+4.7%); good margin progress, EPS +54%, a solid start to Q3 with LFL’s +4% vs sector at c1% and recent NIC/NLW rises expected to be largely mitigated. We hold off making forecast changes but remain positive given Loungers’ position on the high street differentiates it in the crowded hospitality space and has attractive ongoing growth prospects.
