Fidelity may reject £278m offer for PizzaExpress

The biggest shareholder in PizzaExpress is considering not accepting the terms of the £278m takeover offer for the struggling restaurant group over concerns that the price does not reflect the long-term value of the business.

City sources said Fidelity Investments, which owns around 9 per cent of PizzaExpress, was weighing up the possibility of retaining its stake once the company is delisted as a minority shareholder. To do this, the fund manager, which favoured scrapping the auction of PizzaExpress until trading conditions improved, would need to join forces with some of the other shareholders who have yet to accept the offer as it needs a minimum stake of 10 per cent for such a move.

Neither M&G, part of Prudential, which owns just under 2 per cent, or Analyst Investment Management, a near 3 per cent shareholder, are thought to have accepted the takeover offer from the GondolaExpress consortium.

The offer, which trumped a rival bid from PizzaExpress founder Luke Johnson, was declared unconditional earlier this month after acceptances breached the 75 per cent mark. However it remains open, leaving Fidelity the option of accepting. Fidelity and M&G both declined to comment yesterday.

GondolaExpress has already had to lower the level at which it could declare the bid unconditional from 90 per cent, a more typical level, to 75 per cent due to the slow response from investors. It cannot now compulsorily mop up shares from other investors and must face the possibility of a future with unwanted shareholders.

It is rare for fund managers to retain stakes in private companies and suggests they are unhappy about the prices at which venture capital groups have been taking companies private. One senior fund manager said: "I sense in the last few weeks that there has been a little bit of anxiety about the value of some of these bids."

GondolaExpress is backed by two private equity firms: Capricorn Ventures International and TDR Capital.