TM Group

Operator of a chain of newsagents with stores, convenience stores, and high street stores.

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In November 1998 Montagu continued its highly successful partnership with TM Group Holdings ('TM Group') when it provided follow-on equity to support the £75 million (€120 million) acquisition of Martin Retail Group ('MRG') from a consortium of banks.

Montagu first invested in TM Group in 1995 when, together with Electra Fleming, it backed the Management Buyout of what was then the retail division of Gallagher plc. The bid was successful in the face of strong competition from both trade and financial buyers, and was completed within three weeks of the team being granted exclusivity.

TM Group comprised the Forbuoys chain of newsagents and convenience stores, Mayfair Services, the leading UK cigarette vending company, and Vendepac, the leading operator of food and drink vending machines in the UK. In early 1998 we arranged a complete re-financing of TM Group via a £160 million (€256 million) sterling and US dollar high yield bond. This was a groundbreaking transaction, representing the first substantial recapitalisation for a financial investor via the high yield bond market. In 1999 TM Group won the Large Management Buyout of the Year Award, sponsored by the Financial Times and the British Venture Capital Association, in recognition of its achievements.

The TM Group investment illustrated the way Montagu has for many years seen private equity investment as a partnership between itself and its investee companies. Subsequent to our original investment in 1995 we acquired a further four companies, the most significant of which was MRG, which comprised 800 convenience and CTN stores trading under the Martins and RS McColl brands. In addition, Mayfair Services and Vendepac were both sold to trade buyers for attractive multiples. The combined group became the UK's largest chain of CTN and convenience stores, numbering approximately 1,400. TM Group was also the UK's leading owner of regional sub-post offices, the largest operator of National Lottery terminals, and one of the largest retailers of news and tobacco.

Montagu sold its investment in TM Group to HBOS Integrated Finance in 2005.

Deal details

Deal type: Management Buyout, Follow-on Acquisition Investment Year: 1995 Country: United Kingdom Status: Realised Value: £173 million Industry Sector: Consumer