Ultimate Leisure Group has bought Living Ventures, the restaurant and bar business that owns the Living Room brand, in a £28 million deal.
The company expects the acquisition of the Living Room, which has one of its sites on Birmingham's Broad Street, to add to its earnings in the first year of ownership.
Ultimate Leisure plans to more than double the number of Living Room sites in the next five years. At present the chain has 13 sites in England and Scotland, although this is intended to rise to 30 within the next five years with Worcester among the target sites.
Living Ventures, which was an associate company of the Restaurant Group, will be renamed the Living Room after the acquisition.
Living Ventures has used the proceeds to reduce bank indebtedness, repay outstanding loan note interest and preference debt due to the Restaurant Group, with the remaining proceeds being distributed to the shareholders of Living Ventures.
TRG expect to receive a total of £7.8 million in cash as a result of this transaction including outstanding loan note interest, repayment of TRG's preference debt and equity distribution.
In the year to March 31, The Living Room delivered sales of £29.2 million and site earnings before interest, depreciation and of £6.050 million.
The deal represents a cost per site of £2.151 million and 4.6 x unit EBITDA.
Ultimate, a Newcastle-based clubs and bar operator has been attempting to increased its food revenues and said the food mix at Living Room was considerable with 36 per cent of total sales.
Sales at Living Rooms had performed well since the end of April and were 3.2 per cent ahead on a like for like basis, the company said.
The acquisition of The Living Room, which follows the recent purchase of the Bel and the Dragon group of pub restaurants, provided Ultimate with an established format and brand at the premium end of the market as well as the benefits of scale derived from having more than 50 sites, the company said.
Mark Jones, chairman of Ultimate, said: "This acquisition represents a logical and major move towards meeting our long-term strategic priorities."