Chicken chain Bojangles' to go private for $594M
- Chicken-and-biscuits chain Bojangles' announced Tuesday that it will be taken private by investment firms Duration Capital Management and Jordan Co for $593.7 million, according to a company release.
- The Charlotte-based restaurant company said shareholders will receive $16.10 in cash for each share they hold, translating to a 15% premium to Bojangles' September stock price. The deal is expected to close in the first quarter of fiscal 2019, at which point it will become a privately held company. The chain will continue to operate as an independent brand.
- "Bojangles' has a differentiated offering, a talented team of employees and dedicated franchisees that are committed to their businesses and their communities," Ian Arons, partner at The Jordan Company, said in a statement. "We are excited to invest in a company with such great growth potential, and we believe that with our partners’ support, Bojangles' will be well-positioned for long-term success."
Bojangles has been public since 2015, when private equity company Advent International brought it onto the stock market. But going private could give the restaurant chain the leverage it needs to better compete with rivals like Chick-fil-A, KFC and Popeyes. Once the deal closes, the company will be able to shed the short-term pressures of meeting or surpassing Wall Street earnings expectations, giving it more bandwidth for long-term growth initiatives.
One such initiative is Bojangles' "restaurant portfolio optimization program," which has spurred the closure of 10 underperforming corporate stores and refranchising of 30 restaurants. The locations that were shuttered were losing about $2.9 million in company-operated restaurant contributions.
This effort to steady the ship comes just months after former CEO Clifton Rutledge announced he was leaving his post for personal reasons. Rutledge's predecessor James Kibler has taken the helm in an internal role since then. Financial performance since than has been mixed — the company reported a revenue uptick of 2.7% to $140.5 million in its second quarter 2018, but same-store sales and company-run comps fells 0.2% and 0.8%, respectively.
It remains to be seen how the Southern chain will perform under new ownership and as a private entity, but Kibler seems optimistic that Duration Capital and Jordan Co are "committed to maintaining the qualities of this brand that have sustained it for over four decades."
"We are confident that this agreement offers a promising opportunity to realize the highest value for our stockholders while providing a strong path forward for the Bojangles' brand, its employees, franchisees, and loyal customers," William A. Kussell, director and non-executive chairman of Bojangles, added in the company statement.
The sale comes on the heels of similar deals in the restaurant sector. In September, Arby's owner Inspire Brands took Buffalo Wild Wings owner Sonic Corp private for nearly $1.57 billion, and the industry is speculating that beleaguered pizza chain Papa John's may not be far behind. Bain Capital and CVC Capital Partners are the latest firms rumored to be wooing the company, which has struggled to regain its footing after former CEO John Schnatter's highly visible ouster. Schnatter, who resigned in July, owns 30% of the company.
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