los angeles — FAT (Fresh. Authentic. Tasty.) Brands Inc. has reached an agreement to acquire Global Franchise Group from Serruya Private Equity, Inc. and Lion Capital LLP for $442.5 million in cash and stock. Headquartered in Atlanta, Global Franchise Group 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.
Once finalized, the acquisition will give FAT Brands a portfolio encompassing more than 2,000 franchised and company-owned restaurants around the world with combined annual system-wide sales of approximately $1.4 billion. The acquisition is expected to eventually increase FAT Brands’ annual EBITDA by approximately $40 million to approximately $55 million to $60 million, the company said.
“This acquisition is a key strategic milestone for FAT Brands,” said Andy Wiederhorn, president and chief executive officer of 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. 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.”
FAT Brands said the cash portion of the purchase price will be funded from the issuance of a new series of notes and cash on hand. Meanwhile, the company also plans to 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.
“This is truly a transformative deal for both FAT Brands and GFG,” said Michael Serruya, managing director at Serruya Private Equity and chairman of Global Franchise Group. “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. I look forward to our continued involvement with GFG through our company’s support of FAT Brands from an equity and strategic perspective.”
FAT Brands 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.