Companies: RTN   

The Restaurant Group (TRG) finally confirmed it is in talks to acquire a controlling shareholding in contemporary-styled bar and restaurant operator Living Ventures. Already running the Caffe Uno, Garfunkel's, Frankie & Benny's, Chiquito and Est Est Est brands, TRG's chairman Alan Jackson, who is also the chairman of Living Ventures, indicated that if the deal goes through, Est Est Est would be sold to Living Ventures. TRG recently issued a positive trading statement where full year like-for-like sales for 2004 were up 5%. In particular, its leisure parks and concessions businesses thrived, although the high street sites experienced quieter trading. Last year it made an unsuccessful attempt to acquire restaurant chain ASK, which eventually delisted from AIM after Riposte, a company formed by private equity company TDR Capital and Capricorn Ventures International, ultimately won the bidding. Living Ventures operates from 14 sites and has three concepts: The Living Room, Mosquito and Prohibition. It also was on the deal trail but failed to entice the Bank Restaurant group to merge in 2004. Consensus analysts expect TRG to announce £23.95m in pre-tax profits for 2004 (a £800,000 upgrade since December), rising to £26.6m in 2005. The EPS of 8.14p serves up an appetising prospective p/e of 14.4, below the sector average of 17.1. The shares did not move after the announcement, remaining at 118p. Worth buying.