Coffee Republic attracts Arab interest

The deal is thought to be largely opportunistic, with the owners of rab Investments seeing the chance to buy a large chain of leasehold outlets at a cheap price.

http://www.ft.com
July 18, 2009

Coffee Republic attracts Arab interest
Daniel Thomas

The property company behind plans for one of London's tallest skyscrapers has emerged as the surprise potential buyer of Coffee Republic, the coffee shop chain.

Arab Investments, a private property investment company best known for its proposed Pinnacle tower in the City of London, yesterday entered into an exclusivity agreement with KPMG, which is acting as administrator to the coffee shop chain.

If successful, Arab Investments intends to put money into developing the Coffee Republic brand in the UK and overseas, and will start expanding the branch network immediately after completing the deal. It is thought to be in talks to acquire about 80 outlets, of which 20 are outside the UK, in countries such as Saudi Arabia and Bulgaria.

The chain had been hit by the drop in discretionary spending on the high street during the recession. Some of the less profitable bars also struggled with expensive leases.

Although Coffee Republic Plc did not go bust, its three subsidiaries, Coffee Republic (UK), Coffee Republic Franchising Ltd and Goodbean Ltd, were placed into administration.

Arab Investments is thought to see the chain as having a strong brand name, which can be grown to challenge larger chains such as Starbucks and Costa. The deal is thought to be largely opportunistic, with the owners of rab Investments seeing the chance to buy a large chain of leasehold outlets at a cheap price. No financial details of the transaction were provided.

KPMG confirmed that it had granted a period of exclusivity to the preferred purchaser of Coffee Republic, but declined to comment on the identity of the buyer.

Joint administrator Richard Hill said: "As expected, the huge volume of enquiries from interested parties produced a very healthy level of offers. We have spent the last few days clarifying the terms of the most attractive offers and we have now identified our preferred purchaser.

"We have agreed a period of exclusivity to allow that party to carry out some limited due diligence, which should enable us to agree the terms of the sale of the residual business as a going concern during the course of next week." * Chester Properties, a private investment group, is in talks to buy an £800m portfolio of properties from Aviva Investors in what would be the biggest commercial property deal since the start of the real estate slump in 2007. The group has emerged as the favourite ahead of a shortlist including CIT with backing from Saudi Arabia's Jadwa Investment. Aviva is also providing debt on the sale.

Copyright The Financial Times Limited 2009

http://www.ft.com/cms/s/0/93c6ec24-7332-11de-ad98-00144feabdc0.html


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