Corporate raider puts Chez Gerard on his menu

Groupe Chez Gerard, best known for its steak-frites chain, was thrust into the takeover spotlight yesterday after Guy Naggar, the corporate raider, launched his long-awaited formal offer.

But attention will focus on whether Neville Abraham, the group's chairman and co-founder, will launch a management buyout after refusing to back Mr Naggar's all-share bid. In a brief statement, Chez Gerard said it was "considering" the offer, which came five months after Mr Naggar first announced his interest, and would respond "in due course".

Mr Naggar, who is using his quoted cash shell, Paramount, as a bidding vehicle, is offering shareholders 3.75 new Paramount shares for every Chez Gerard share. There is also a cash alternative of 75p a share, valuing the group at £15.5m.

"If they think that looks cheap, they can stay in," said Mr Naggar, who is also of the corporate finance boutique Dawnay Day. The offer is below the 100p a share mooted by Paramount in September.

Mr Abraham, who re-took the executive reins at Chez Gerard last year in an attempt to rescue falling sales, has a 9 per cent stake in the group while his co-founder and deputy chairman, Laurence Isaacson, holds a further 7.5 per cent. Last month, Mr Abraham recruited Simon Binder, a leisure industry veteran, as managing director, signalling his determination not to sell out to Mr Naggar.

Paramount, a former pub company, is supported by JO Hambro, the investment group that is underwriting the cash alternative and has a 26.7 per cent stake in Chez Gerard. Mr Naggar said shareholders with a combined 21.1 per cent stake, including Axa Investment Managers and Invesco Perpetual, had pledged support.

Shares in Chez Gerard closed up 3p at 71.5p.