City warms to Patisserie Valerie deal for bakery chain Gail’s

Shares in Patisserie Valerie’s owner rose on Tuesday as investors gave a deal to gobble up bakery chain Gail’s the thumbs up.

Broker Peel Hunt upgraded Patisserie Holdings to Buy and the shares rose 6.2p to 359p.

Patisserie Valerie is expected to tap shareholders for £35 million to help buy the company, which could go for more than £150 million, industry sources said. The deal is not expected to go through before March.

Serial entrepreneur Luke Johnson, chairman of Patisserie, has a majority stake in Bread Holdings, which includes the chain of artisan cafés and wholesaler Bread Factory. It made pre-tax profits of £3.3 million on sales of £79 million last year.

The deal could lead to a hefty exit for the restaurant tycoon, the latest in a string of paydays after the lucrative expansion of Pizza Express. Johnson sold part of his Patisserie Holdings stake for £12.6 million in 2015 and is believed to have scored a big payday from the sale of the Giraffe restaurant chain to Tesco in 2013.

He has owned casual dining chains including Strada and Patisserie Valerie, floated in 2014, and invested a reported £10.5 million in Bread Holdings in 2011.