Shares of Hostmore plunged more than 70% on Monday as the British restaurant operator dropped plans to buy TGI Fridays after it was removed as the manager of TGIF Funding, which owns the right to collect royalties from the pub chain franchise.
"The predictable and highly cash-generative royalty stream of TGI Fridays was the primary attractive feature for the Group in pursuing the acquisition," Hostmore said.
Hostmore, which operates pub chain TGI Fridays in the UK via its unit Thursdays (UK), said the sale of its corporate stores is expected to be completed in September, albeit at a lower value than the loans held by Thursdays.
Shares of the British hospitality company were down 70.1% at a record low of 2.8 pence, as of 0740 GMT.
The company said it expects to be delisted from the London Stock Exchange upon completion of the corporate store sales process.
TGI Fridays will continue its operations in the UK under a new ownership, Hostmore added.
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