- TGI Fridays and Allegro Merger Corp., a special purpose acquisition firm, have signed a business combination agreement that will take the casual restaurant chain public if the deal closes, according to a press release.
- At closing, TGI Fridays' shareholders will receive $30 million in a combination of cash and stock, and Allegro will take on around $350 million of debt.
- TriArtisan Capital Advisors LLC, the majority owners of TGI Fridays, plan to exchange a majority of its ownership in the restaurant for shares of Allegro. MFP Partners expects to trade its entire Fridays ownership for shares of Allegro. Fridays shareholders will gain an additional $2 million in Allegro shares if the restaurant meets undisclosed post-close performance goals.
If this deal closes with the blank-check company — uses bank financing and funds from IPOs to purchase privately held brands and take them public — the proceeds would help TGI Fridays trim its debt, which could provide welcome relief for the brand as the casual dining segment continues to struggle with declining sales and diner interest.
"This transaction is the next significant strategic move and will allow us to gain public company status and access incremental equity capital to accelerate the rejuvenation of this iconic brand," Fridays CEO Ray Blanchette said in a statement.
The chain has been privately held since it merged with Carlson Restaurant in 1975 when the chain had only 12 restaurants. In 2014, Carlson sold the company to TriArtisan Sentinel Partners for more than $800 million. For the fiscal year ended Sept. 30, Fridays' systemwide sales exceeded $2 billion on average unit volumes of $2.7 million.
Fridays isn't the only restaurant firm to angle for an IPO through a blank check company this year. Chuck. E. Cheese's parent company Queso Holdings and its controlling stockholder, Apollo Global, terminated their business combination agreement with Leo Holdings in July. The deal would have taken the eatertainment company public.
Both Fridays and Allegro's boards have unanimously approved the merger agreement, per the press release. Allegro will hold a shareholders meeting where shareholders can approve the business combination, which is subject to a $30 million minimum cash closing condition. The deal is expected to close in Q1 2020.