Transaction to Add Award-Winning,
Fast-Casual Restaurant Concept with Significant Global Growth
Potential to KFC, Pizza Hut and Taco Bell Parent Company
Yum! Brands, Inc. (NYSE:YUM) and The Habit Restaurants, Inc.
(NASDAQ:HABT) (“The Habit Burger Grill”) today announced that they
have entered into a definitive agreement pursuant to which Yum!
Brands will acquire all of the issued and outstanding common shares
of The Habit Burger Grill for $14 per share in cash or a total of
approximately $375 million. The board of directors of The Habit
Burger Grill, acting on the recommendation of a special committee
composed of non-executive independent directors, has unanimously
approved the transaction.
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Yum! Brands, Inc. (NYSE:YUM) and The
Habit Restaurants, Inc. (NASDAQ:HABT) today announced that they
have entered into a definitive agreement for Yum! Brands to acquire
The Habit Restaurants, which operates the award-winning fast-casual
concept The Habit Burger Grill, featuring a flavor-forward variety
of made-to-order items uniquely chargrilled over an open flame.
(Photo: Business Wire)
The acquisition of The Habit Burger Grill will add an
award-winning fast-casual concept with a loyal fan-base to Yum!
Brands, the world’s largest restaurant company in terms of units
and parent of the KFC, Pizza Hut and Taco Bell global brands.
Founded in California in 1969, The Habit Burger Grill offers a
flavor-forward variety of made-to-order items uniquely chargrilled
over an open flame. Fan favorites include charburgers,
hand-filleted and marinated chargrilled chicken sandwiches,
sushi-grade chargrilled ahi tuna sandwiches, fresh salads,
craveable sides and handmade frozen treats. The Habit Burger Grill,
named Best Regional Fast Food in USA Today’s 2019 Best Readers’
Choice Awards, operates nearly 300 company-owned and franchised
restaurants across the U.S. and in China.
David Gibbs, Chief Executive Officer of Yum! Brands, said,
“We’ve emerged from our three-year transformation stronger and in a
better position to accelerate the growth of our existing brands and
leverage our scale to unlock value from strategic
acquisitions.”
Gibbs continued, “As a fast-casual concept with strong unit
economics, The Habit Burger Grill is a fantastic addition to the
Yum! family and has significant untapped growth potential in the
U.S. and internationally. With its delicious burgers and fresh
proteins chargrilled over an open flame, The Habit Burger Grill
offers consumers a diverse, California-style menu with premium
ingredients at a QSR-like value. The transaction is a win-win
because it allows us to offer an exciting new investment to our
franchisees and to expand an award-winning, trend-forward brand
through the power of Yum!’s unmatched scale and strengths in
franchising, purchasing and brand-building.”
Yum! Brands estimates minimal impact to non-GAAP earnings per
share before special items in 2020, with accretion beginning in
2021 and increasing thereafter.
Russell Bendel, President and Chief Executive Officer of The
Habit Burger Grill, said, “Over the past few years, we’ve focused
on becoming a total access brand by growing our delivery business,
expanding our online ordering and mobile channels and enhancing the
in-store experience by introducing drive-thrus, kiosks and
technology-centric solutions for operations. We’re proud these and
other actions have made The Habit Burger Grill an attractive
candidate for a transaction of this kind. On behalf of The Habit
Burger Grill Board of Directors, this transaction represents an
exciting new chapter to strengthen and significantly grow The Habit
Burger Grill by leveraging Yum! Brands’ global scale, resources and
franchising capabilities. We’re confident the agreement delivers
immediate value to The Habit Burger Grill shareholders and will
greatly benefit our beloved brand, team members, franchisees and
loyal guests for many years to come.”
The Habit Burger Grill
Highlights
Customer experience of quality, hospitality, convenience and
QSR-like value. The Habit Burger Grill is focused on delivering
a unique customer experience, served up by talented team members
and underpinned by outstanding operations capabilities. The brand
pairs the premium quality and hospitality consumers associate with
full-service and fast-casual chains with the strengths in value,
convenience and digital access of quick-service restaurants.
Diverse, grill-focused and California-style menu. It
offers customers a diverse menu featuring a distinctive chargrilled
preparation technique to deliver an appealing variety of burgers,
chicken, tuna and steak featured in its sandwiches and salads,
which are made-to-order using fresh ingredients.
Modern asset strategy to drive traffic. The Habit Burger
Grill believes its investment in contemporary restaurant design –
featuring open kitchens, outdoor patios and interiors enhanced with
natural light, polished stone and hardwood accents – has
contributed to its balanced day part mix of approximately 50
percent lunch and 50 percent dinner.
Expanding digital and delivery capabilities. Over the
past couple of years, The Habit Burger Grill has been enhancing the
customer experience through delivery partnerships and by
introducing online ordering, a mobile app, restaurant kiosks,
drive-thrus and technology-centric solutions to deliver excellent
store operations.
Strong unit economics and growth. From fiscal year 2009
to 2018, The Habit Burger Grill grew its company-operated
restaurant average unit volumes (AUVs) by 49.9%, from approximately
$1.2 million to $1.9 million, respectively. In the same time
period, The Habit Burger Grill grew its total units at a 28.4%
compound annual growth rate.
Transaction Details
Yum! Brands intends to fund the transaction using cash on hand
and available borrowing capacity under its credit facilities.
The transaction is subject to approval by The Habit Burger
Grill’s stockholders, regulatory approval and other customary
closing conditions. The transaction is expected to be completed by
the end of the second quarter of 2020.
Following the closing of the transaction, The Habit Burger Grill
will remain based in Irvine, Calif., and will continue to be
managed by The Habit Burger Grill’s President and CEO Russell
Bendel and Chief Financial Officer Ira Fils. Mr. Bendel will report
directly to David Gibbs.
BofA Securities, Inc. acted as financial advisor and Mayer Brown
LLP acted as legal advisor to Yum! Brands. Piper Sandler Companies
(formerly Piper Jaffray Companies) acted as financial advisor and
Ropes & Gray LLP acted as legal advisor to The Habit Burger
Grill.
About The Habit Burger GrillThe Habit Burger Grill is a
burger-centric, fast-casual restaurant concept that specializes in
preparing fresh, made-to-order chargrilled burgers and sandwiches
featuring USDA choice tri-tip steak, grilled chicken and
sushi-grade tuna cooked over an open flame. In addition, it
features fresh made-to-order salads and an appealing selection of
sides, shakes and malts. The Habit Burger Grill was recently named
Best Regional Fast Food in USA Today’s 2019 Best Readers’ Choice
Awards. The first Habit Burger Grill opened in Santa Barbara,
California, in 1969. The Habit has since grown to over 270
restaurants, including locations in 13 states throughout
California, Arizona, Utah, New Jersey, Florida, Idaho, Virginia,
Nevada, Washington, Maryland, Pennsylvania, North Carolina and
South Carolina, as well as seven international locations. More
information is available at www.habitburger.com.
About Yum! BrandsYum! Brands, Inc., based in Louisville,
Kentucky, has over 49,000 restaurants in more than 145 countries
and territories primarily operating the company’s restaurant brands
– KFC, Pizza Hut and Taco Bell – global leaders of the chicken,
pizza and Mexican-style food categories. Worldwide, the Yum! Brands
system opens over eight new restaurants per day on average, making
it a leader in global retail development. In 2018, Yum! Brands was
named to the Dow Jones Sustainability North America Index and
ranked among the top 100 Best Corporate Citizens by Corporate
Responsibility Magazine. In 2019, Yum! Brands was named to the
Bloomberg Gender-Equality Index for the second consecutive
year.
Cautionary Statement Regarding Forward-Looking
StatementsCertain statements in this communication contain
“forward-looking statements.” Forward-looking statements can be
identified by the fact that they do not relate strictly to
historical or current facts. Forward-looking statements are based
on current expectations, estimates, assumptions or projections
concerning future results or events, including, without limitation,
the projected closing date for the transaction, the anticipated
benefits of the transaction, and the future earnings and
performance of Yum! Brands or any of its businesses.
Forward-looking statements are neither predictions nor guarantees
of future events, circumstances or performance and are inherently
subject to known and unknown risks, uncertainties and assumptions
that could cause actual results to differ materially from those
indicated by those statements. We cannot assure you that any of the
expectations, estimates or projections expressed herein will be
achieved. Numerous factors related to the transaction could cause
actual results and events to differ materially from those expressed
or implied by forward-looking statements, including, without
limitation: the risk that the proposed transaction may not be
completed in a timely manner or at all, the failure to satisfy any
of the conditions to the consummation of the proposed transaction,
including the adoption of the merger agreement by the shareholders
of The Habit Burger Grill; the timing to consummate the proposed
transaction; the risk that a regulatory approval that may be
required for the proposed transaction is delayed; the occurrence of
any event, change or other circumstance that could give rise to the
termination of the merger agreement between the parties; the effect
of the announcement or pendency of the proposed transaction on
Yum!’s and The Habit Burger Grill’s business relationships,
operating results and business generally; the risk that the
proposed transaction may disrupt current plans and operations and
the potential difficulties in employee retention as a result of the
proposed transaction; the ability to achieve the synergies and
value creation contemplated; Yum!’s ability to promptly and
effectively integrate The Habit Burger Grill’s businesses; the risk
that revenues following the transaction may be lower than expected;
the risk that operating costs and business disruption (including,
without limitation, difficulties in maintaining relationships with
employees and suppliers) may be greater than expected; the
assumption of unexpected risks and liabilities; the outcome of any
legal proceedings that may be instituted related to the proposed
transaction; the diversion of and attention of management of both
Yum! and The Habit Burger Grill on transaction-related issues;
the success of Yum!’s refranchising strategy; and the other factors
discussed in “Risk Factors” in YUM’s Annual Report on Form 10-K for
the fiscal year ended December 31, 2018, The Habit Burger
Grill’s Annual Report on Form 10-K for the fiscal year ended
December 25, 2018 and subsequent filings with the SEC made by
both YUM and The Habit Burger Grill, which are available at
http://www.sec.gov. Yum! and The Habit Burger Grill assume no
obligation to update the information in the communication, except
as otherwise required by law. Accordingly, you should not place
undue reliance on these forward-looking statements.
Additional Information and Where to Find ItIn connection
with the proposed merger, The Habit Restaurants, Inc. (the
“Company”) expects to file with the SEC and furnish to its
stockholders a proxy statement on Schedule 14A, as well as other
relevant documents concerning the proposed merger. Promptly after
filing its definitive proxy statement with the Securities and
Exchange Commission (the “SEC”), the Company will mail the
definitive proxy statement and a proxy card to each Company
stockholder entitled to vote at the special meeting relating to the
proposed merger. The proxy statement will contain important
information about the proposed merger and related matters.
STOCKHOLDERS AND SECURITY HOLDERS OF THE COMPANY ARE URGED TO READ
THESE MATERIALS (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO)
AND ANY OTHER RELEVANT DOCUMENTS IN CONNECTION WITH THE MERGER THAT
THE COMPANY WILL FILE WITH THE SEC WHEN THEY BECOME AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE COMPANY,
THE MERGER AND THE OTHER TRANSACTIONS CONTEMPLATED BY THE MERGER
AGREEMENT THAT HOLDERS OF THE COMPANY’S SECURITIES SHOULD CONSIDER
BEFORE MAKING ANY DECISION REGARDING VOTING. This communication is
not a substitute for the proxy statement or for any other document
that the Company may file with the SEC and send to its stockholders
in connection with the proposed merger. The proposed merger will be
submitted to Company stockholders for their consideration.
Stockholders and securityholders of the Company will be able to
obtain the proxy statement, as well as other filings containing
information about the Company and the proposed merger, without
charge, at the SEC’s website (http://www.sec.gov). Copies of the
proxy statement (when available) and the filings with the SEC that
will be incorporated by reference therein can also be obtained,
without charge, by contacting the Company’s Investor Relations at
HabitIR@habitburger.com or (949) 943-8692, or by going to the
Company’s Investor Relations page on its website at
http://ir.habitburger.com/investor-overview.
Participants in the SolicitationThe Company and certain
of its directors, executive officers and employees may be deemed to
be participants in the solicitation of proxies in respect of the
proposed Merger. Information regarding the interests of the
Company’s directors and executive officers and their ownership of
shares of the Company’s common stock is set forth in the Company’s
Annual Report on Form 10-K for the fiscal year ended December 25,
2018, which was filed with the SEC on March 1, 2019, and in the
Company’s proxy statement on Schedule 14A, which was filed with the
SEC on April 23, 2019, and will be included in the Company’s
definitive proxy statement to be filed with the SEC in connection
with the proposed Merger, and certain of its Current Reports on
Form 8-K. Other information regarding the participants in the proxy
solicitation and a description of their direct and indirect
interests in the proposed Merger, by security holdings or
otherwise, will be contained in the proxy statement and other
relevant materials to be filed with the SEC in connection with the
proposed Merger. Free copies of these documents may be obtained as
described in the preceding paragraph.
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version on businesswire.com: https://www.businesswire.com/news/home/20200106005474/en/
Analysts are invited to contact:Keith Siegner, Vice President,
Investor Relations, Corporate Strategy and Treasurer at
888/298-6986
Members of the media are invited to contact:Virginia Ferguson,
Senior Director, Public Relations, at 502/874-8200
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