After a year of falling sales and share prices, UK restaurant group Pizza Express is facing a possible takeover from a consortium including its former owner. The bid has come chiefly because the company is looking cheap – but whether it can still reach its potential without being bought is another question. If Pizza Express's dismal trading run continues, shareholders could be forgiven for selling up.

Troubled restaurant group Pizza Express announced today that the Twigway consortium had made a takeover bid. Twigway consists of Capricorn Ventures and Sun Capital Partners.

Capricorn is one of the main investors in Nando's, the chain of chicken restaurants, while Sun latter belongs to Hugh Osmond, former Pizza Express owner and head of the Punch Pub Company. Mr Osmond originally acquired Pizza Express in the early 1990s for £15m (US$23.4m).

The bid comes a few days after Pizza Express's announcement that sales in its core restaurants are still falling. The company plans a £13m refurbishment of its 300 outlets over the next two years in an attempt to encourage a return of its customers.

With bay windows opening onto the pavement, Pizza Express opened its first restaurant on Dean Street in London's vibrant Soho area in the 1960s. It has now branched out and owns the Pasta Café chain and its own-branded pizzas are sold through supermarkets.

The reason for the Twigway bid is that the recent decline in Pizza Express's share price has left the company looking cheap. At the beginning of the year, Pizza Express shares were valued at £9.20, but this fell to £2.45 in October, following news of disappointing sales. The restaurant chain partly blamed these sales figures on reduced numbers of tourists and on a general slump in the economy.

Since speculation began on a possible takeover, share prices have risen to £3.20; the takeover bid is based on a share price of between £3.30-3.50, valuing the company at around £250m. So far, Pizza Express has taken no action.

The question now is whether the company's refurbishment plans will do enough to stave off the bid. Certainly, if this year's gloomy record of ever-worsening trading continues, shareholders could be forgiven for deciding to sell up.

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