Gaucho Grill goes private as CEO leads £13m buyout

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The Independent Online

Gaucho Grill, the Argentinian-themed steak house that was knocked sideways by the collapse in consumer appetite for meat, is to be taken private by its management and a South African retailing family for £13.2m.

The agreed deal, at 20p a share, ends speculation over the group's future after its chief executive, Zeev Godik, first proposed a management buyout last year.

Yesterday's offer was made by Pan European Restaurants, a company set up by Oceana Investment Group and its subsidiary Gioma Group, which already own almost 85 per cent of the company. Gioma is Mr Godik's investment vehicle while Oceana is owned by the Lewis Family Trusts of South Africa.

Mr Godik blamed tough trading conditions for the group's poor stock market history. The share price has plunged since peaking at 62.5p in October 1999 to a low of 12p earlier this year.

"The share price was going nowhere. Sentiment to the leisure sector has been bad and market conditions are not good. It would be impossible to raise more money from the stock market," he said.

Gaucho, which issued two profits warnings last year and made a loss of £1.3m, was badly hit by BSE and the foot-and-mouth crisis as custom-ers shunned its carnivorous menu. Mr Godik said that after an export ban was imposed on Argentinian beef in March 2001, it was only just getting it back on the menu.

The offer is backed by Gaucho's independent directors, which include Nicola Horlick, the City "superwoman" and managing director of SG Asset Management. The directors based their reasoning on the group's low market capitalisation and its lack of liquidity.

The company said that while it hoped to see trading pick up this year, "no evidence of any such improvement has yet emerged". Underlying sales for the year to date are down 3.3 per cent on last year. The group also blamed the reduction in the number of tourists in the wake of 11 September for its trad- ing woes.

Gaucho owns nine restaurants in the UK, of which seven are in London, along with nine in Switzerland and 23 in The Netherlands. Its shares rose 3.5p to 20p.

Gaucho Grill is not alone in finding times tough. London's restaurant sector has struggled to bounce back since US visitors stopped coming to the capital. Chez Gerard, the French-styled chain of steak restaurants, and Fish!, run by entreprenuer Tony Allan, are among the quoted groups that have seen their share prices collapse, while Luke Johnson is taking his Signature Restaurants group private in response to prolonged poor trading. Pizza Express, the former stock market star has reported sliding sales in London, prompting a series of analysts' downgrades.

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