Founder wants to take Caffè Nero private

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The Independent Online

Caffè Nero, the Italian-themed coffee shop chain, revealed yesterday it had received an informal bid approach from its chief executive, Gerry Ford, sending the shares 11 per cent higher to 245p.

In a short Stock Exchange announcement released yesterday afternoon, the company stressed that the talks were at an early stage and said there could be no certainty that a formal bid would be forthcoming.

Mr Ford, who founded the company in 1997, already owns 16 per cent of the shares and is believed to have forged his management buyout proposal with the long-term backer Paladin Partners, a venture capital business that owns 28 per cent of the group.

The pair are believed to have begun working on a proposal to take the group private again after seeing its shares fall for six months in spite of persistently strong trading figures.

The statement was issued after the shares had risen almost 20 per cent in just two weeks, valuing the group at £155m, as the City got wind of Mr Ford's intentions. Before the start of August, however, the stock had fallen by more than 28 per cent in just six months.

Mr Ford founded the company with just five branches, floating the business in 2001 at 50p per share. The group now has more than 250 sites and is planning to build a chain of more than 450 within the next five or six years.

Caffè Nero has proved those who have been sceptical about the UK's appetite for expensive coffee bars to be wrong. It has prospered where its rivals, including Bobby Hashemi's Coffee Republic, have struggled. Initially, the company was tarred with the same brush as Coffee Republic, which came close to going bust at one point, but as it showed that it could make money out of selling lattes, investors started taking it seriously.

Mr Ford's inspiration for Caffè Nero came from the European coffee bars he used to hang out in while working on his PhD, which was about US and European relations.

He spotted a gap in the UK market for an Italian-style coffee bar chain at a time when Starbucks was rolling out its own American vision of weak, milky coffees.

In the past 18 months, Caffè Nero's dreams of expanding its UK franchise beyond its southern heartland have been boosted by the retail downturn that has put many high street chains out of business. It has also sought out new opportunities in small towns and suburbs.