Leading Sydney hospitality company the Keystone Group is set to have a national presence after launching a takeover bid for the publicly owned Pacific Restaurant Group (PRG).
The 20-year-old PRG, which went public in 2008, operates Kingsleys Steak & Crabhouse restaurants in Sydney and Brisbane, Chophouse on Bligh Street, Sydney and Jamie’s Italian franchises in Sydney, Perth and Canberra.
Keystone, which began at the time of the Sydney Olympics with Cargo Bar, has more than a dozen bars, nightclubs, hotels and dining spots in Sydney, from King Street Wharf to Kings Cross and Manly.
Keystone Group managing director John Duncan confirmed the acquisition to Business Insider this afternoon, but would not name a price.
The deal will be finalised within a fortnight and completed within two months. The merger will see Keystone running around 20 sites and more than 1300 employees, while former Channel 10 boss Grant Blackley is joining Keystone as CEO.
Mr Duncan said the two companies had worked together on the Rushcuttters dining, bar, deli and market project, involving chef Martin Boetz, before Keystone made its approach.
“We’re like-minded people and it’s a good time for us to come together. PRG has a good business model and we’re very much a beverage-focused business, they a food-focused business. It gives us some very strong brands,” he said.
But Keystone’s business has been hit by Sydney’s draconian drinking laws, which came into effect earlier this year, especially its Kings Cross premises, sports bar The Sugar Mill, Kit and Kaboodle, and Gazebo Wine Bar. (Gazebo is currently closed, awaiting refurbishment, to reopen in September.)
“The whole area has been affected by the lockouts, but rejuvenation is a normal part of the cycle. It’s unfortunate businesses like Gazebo have been caught up in this,” Duncan said. “It’s a great little venue and we’re all passionate about it.”
He rejected speculation that Keystone was struggling. “Both businesses are very profitable, have been established for a long time and have the full support of their financiers,” he said.
Keystone’s other assets include Bungalow 8, the Newtown Hotel, The Winery in Surry Hills, CBD bar The Rook and Manly Wine.
Its latest joint venture is The Stables Sydney, an exclusive members-only club at Randwick racecourse, with The Australian Turf Club.
While PRG posted a loss in the 2012-13 financial year, revenue grew by more than 20% on the previous year to just under $35 million. The company took a $1.2 million hit in closing its Kingsley’s in Canberra, but was re-opening it as Jamie’s Italian. The previous year PRG posted a $1.1 million profit.
Mr Duncan said that as well as having a bigger national presence the merger will give Keystone the ability to also tackle the New Zealand market
For now, as well as bedding down the new national group, Duncan’s focus is on being part of Sydney’s Barangaroo district.
“We definitely want to be a part of it,” he said.
“Who knows after that.”
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