Activist investor moves to rustle up takeover interest in Upper Crust owner
Irenic Capital is promoting SSP Group to private equity firms after amassing a stake in struggling food-to-go operator
Irenic Capital Management, an activist hedge fund run by an Elliott Management alumnus, is trying to drum up interest in a take-private deal for Upper Crust owner SSP Group after boosting its stake in the food-to-go operator.
The New York-based hedge fund is encouraging private equity groups to launch takeover bids for the London-listed company. The fund has shared materials about the merits of a leveraged buyout with investment bankers and private capital firms in recent weeks, according to a pitch deck seen by the Financial Times.
Irenic argued that SSP could be valued at a 50 per cent premium to its market value in a take-private deal, the deck said. The hedge fund points to SSP’s predictable revenues, its capacity to grow in US airports and ability to generate capital through the sale of non-core assets, including its stake in a listed Indian joint venture.
Travel Food Services, the Indian venture in which SSP is a controlling shareholder, is valued at 177bn rupees (£1.48bn), compared with SSP’s market value of £1.25bn.
SSP operates food outlets in railway stations and airports, including Upper Crust, Caffè Ritazza and franchised outposts of M&S Simply Food and Burger King.
Irenic’s approach at SSP has apparent similarities with an activist campaign it launched in 2023 at Wagamama owner The Restaurant Group, which swiftly resulted in a £506mn sale to private equity group Apollo Management.
The firm was co-founded in 2021 by Adam Katz, a former portfolio manager at Elliott Management, the world’s biggest activist hedge fund, and Andy Dodge.
It is possible that none of the private equity groups being pitched by Irenic will decide to make a bid. Irenic declined to comment. SSP said: “We welcome the feedback and views of all our investors. We are entirely focused on delivering progress against our clear strategic priorities in order to deliver sustainable growth and returns for all of SSP’s stakeholders.”
Irenic now owns roughly 3 per cent of SSP’s stock, up from 2 per cent when the Financial Times first revealed its stake in May, according to people familiar with the situation.
SSP has struggled to recover after the Covid-19 pandemic because of the slow rebound in UK rail travel. Irenic has been pushing the company to boost its profit margins, the people said.
Patrick Coveney, SSP chief executive, told shareholders on an earnings call in May that its post-Covid recovery “wasn’t yet delivering the margins, the returns and the cash flows that we — or you — rightly expect”.
SSP’s operating margin was 2.7 per cent in the six months to March, down from 5 per cent in the same period in 2019.