FAT (Fresh. Authentic. Tasty.) Brands
Inc. (NASDAQ: FAT) (the “Company”)
today announced that it has agreed to acquire Global Franchise
Group, which franchises and operates a portfolio of five quick
service restaurant concepts, Round Table Pizza, Great American
Cookies, Hot Dog on a Stick, Marble Slab Creamery and Pretzelmaker,
from Serruya Private Equity, Inc. and Lion Capital LLP, for $442.5
million in cash and stock.
The cash portion of the purchase price will be
funded from the issuance of a new series of notes and cash on hand.
The Company will also issue to the sellers $25 million in common
stock and $67.5 million in Series B cumulative preferred stock. The
transaction is expected to close by the end of July 2021, subject
to expiration or termination of the applicable waiting period under
the Hart-Scott-Rodino Antitrust Improvements Act.
With the acquisition of GFG, FAT
Brands will have more than 2,000 franchised and
company owned restaurants around the world with combined annual
system-wide sales of approximately $1.4 billion. Approximately 87%
of GFG’s stores are located in the United States. Based on current
projections and assumptions, including realization of expected
synergies and return to pre-COVID restaurant sales, the acquisition
is expected to eventually increase annual EBITDA by approximately
$40 million to approximately $55-$60 million.
“This acquisition is a key strategic milestone
for FAT Brands. We have been very acquisitive in
recent years, seeking to add strong and growing restaurant brands
to our portfolio. Now that the economy is emerging from COVID-19
and restaurants are rapidly recovering, we are pleased to have
reached this agreement to incorporate a powerhouse restaurant
franchising group with the support of Serruya Private Equity and
Lion Capital,” said Andy Wiederhorn, President and CEO
of FAT Brands. “The five new restaurant
concepts have been very resilient coming out of the pandemic and
will complement our existing brands. Furthermore, we will acquire
GFG’s manufacturing operations, which will provide greater
efficiencies and incremental revenue opportunities to our
company.”
“This is truly a transformative deal for both
FAT Brands and GFG. Andy has an exciting vision for FAT Brands and
through his recent acquisitions, he has been able to create brand
synergies within the portfolio while maintaining an asset-light
business model,” said Michael Serruya, Managing Director at Serruya
Private Equity and Chairman of the Board of GFG. “I look forward to
our continued involvement with GFG through our company’s support of
FAT Brands from an equity and strategic perspective.”
Lyndon Lea, Managing Partner of Lion Capital,
added: “We are incredibly thankful to the management team of GFG,
for their incessant focus on building a great business and culture,
while successfully navigating an unprecedented period amidst
COVID-19. We wish FAT Brands and GFG the best in the next phase of
their journey.”
Duff & Phelps Securities, LLC served as
financial advisor to GFG and Serruya Private
Equity. Sheppard, Mullin, Richter & Hampton LLP and
Greenberg Traurig, LLP acted as legal counsel to FAT
Brands. Bryan Cave Leighton Paisner LLP acted as legal
counsel to Serruya Private Equity and Lion
Capital.
About FAT (Fresh. Authentic. Tasty.) Brands
FAT Brands (NASDAQ: FAT) is a leading global
franchising company that strategically acquires, markets and
develops fast casual and casual dining restaurant concepts around
the world. The Company currently owns nine restaurant brands:
Fatburger, Johnny Rockets, Buffalo’s Cafe, Buffalo’s Express,
Hurricane Grill & Wings, Elevation Burger, Yalla Mediterranean
and Ponderosa and Bonanza Steakhouses, and franchises approximately
700 units worldwide. For more information, please visit
www.fatbrands.com.
About Global Franchise
Group, LLC
Global Franchise Group, LLC is a strategic brand
management company with a mission of championing franchise brands
and the people who build them. The company builds great brands that
connect people with craveable products and memorable experiences.
GFG currently supports more than 1,400 franchised and corporate
stores in 16 countries across five quick service restaurant
concepts: Round Table Pizza, Great American Cookies, Hot Dog on a
Stick, Marble Slab Creamery and Pretzelmaker. Global Franchise
Group, LLC is an affiliate of Serruya Private Equity, Inc. and Lion
Capital LLP.
Forward-Looking Statements
This press release contains forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995, including statements relating to the ability of
FAT Brands Inc. (the “Company” or “our”) to complete the
acquisition of Global Franchise Group (“GFG”), the future financial
performance and growth of the Company following the acquisition of
GFG, including the Company’s EBITDA and system-wide sales following
the acquisition, and the Company’s ability to conduct future
accretive and successful acquisitions. Forward-looking statements
reflect the Company’s expectations concerning the future and are
subject to significant business, economic and competitive risks,
uncertainties and contingencies including, but not limited to, the
Company’s ability to successfully integrate and exploit the
synergies of the acquisition, the Company’s ability to grow and
expand revenues and earnings following the acquisition, and
uncertainties surrounding the severity, duration and effects of the
COVID-19 pandemic. These risks, uncertainties and contingencies are
difficult to predict and beyond our control, and could cause our
actual results to differ materially from those expressed or implied
in such forward-looking statements. We refer you to the documents
that we file from time to time with the Securities and Exchange
Commission, including our reports on Form 10-K, Form 10-Q and Form
8-K, for a discussion of these and other risks, uncertainties and
contingencies. We undertake no obligation to update any
forward-looking statement to reflect events or circumstances
occurring after the date of this press release.
About Non-GAAP
Projected Financial
Measures
This press release includes projections of
future EBITDA, a financial measure that is not prepared in
accordance with U.S. generally accepted accounting principles
(“GAAP”). EBITDA is defined as net income (loss), before interest
expense, income tax expense (benefit), depreciation and
amortization expense. EBITDA is not a measurement of the Company’s
financial performance under GAAP, and should not be considered in
isolation or as an alternative to net income (loss) as a measure of
financial performance, cash flows from operating activities as a
measure of liquidity, or any other performance measure derived in
accordance with GAAP. The Company believes that EBITDA is an
important supplemental measure of its operating performance because
it eliminates the impact of expenses that do not relate to business
performance. The Company also believes that this non-GAAP measure
is useful to investors because it and similar measures are
frequently used by securities analysts, investors and other
interested parties to evaluate companies in our industry and
provide additional information regarding growth rates on a more
comparable basis than would be provided without such
adjustments.
The Company prepared the information included in
this press release based upon available information and assumptions
and estimates that it believes are reasonable. The Company cannot
assure you that its estimates and assumptions will prove to be
accurate. Additionally, to the extent that forward-looking non-GAAP
financial measures are provided, they are presented on a non-GAAP
basis without reconciliations of such forward-looking non-GAAP
financial measures due to the inherent difficulty in forecasting
and quantifying certain amounts that are necessary for such
reconciliation.
####
ContactsMedia Relations:JConnellyErin
Mandzikemandzik@jconnelly.com 862-246-9911
Investor Relations:ICRLynne CollierIR-FATBrands@icrinc.com
646-430-2216
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