Flynn Restaurant Group, the largest restaurant franchisee in the U.S., could get considerably larger in a hurry after agreeing to acquire Pizza Hut and Wendy’s franchisee NPC International out of bankruptcy for $816 million.
The agreement is a “stalking horse bid” in bankruptcy court, meaning that it is essentially a starting point in an upcoming auction for NPC—and other bidders are already lining up to take a shot at pieces of the franchisee.
But it gives Flynn the inside track to buy the immense NPC, which operates about 900 Pizza Huts and nearly 400 Wendy’s units. Bidders would have to top Flynn’s bid.
“This is a significant step in our restructuring process, and we are very pleased to have reached this agreement with Flynn, which validates the strong value and long-term potential of NPC’s business,” Jon Weber, CEO of NPC’s Pizza Hut division, said in a statement.
The agreement is subject to court approval, and any better offers in the upcoming auction.
Flynn has agreed to employ just about all of NPC’s more than 300,000 employees. The deal would give the San Francisco-based franchisee five brands: Applebee’s, Taco Bell, Panera Bread, Arby’s, Wendy’s and Pizza Hut.
The company operates more than 1,200 locations across the country and generates more than $2 billion in sales a year.
“We are excited about the possibility of acquiring NPC’s portfolio of Pizza Hut and Wendy’s restaurants, as well as its Shared Services division,” Greg Flynn, Flynn Restaurant Group CEO and founder, said in a statement. “These are great assets and iconic restaurant brands, and we are confident we can maximize the long-term value of the business.”
A court hearing is set for next Friday to approve Flynn as the stalking horse bidder. NPC, which is undertaking a broad-based process in its upcoming auction, plans to solicit bids from other parties for some or all of its assets.
Wendy’s has already indicated it could step in with a bid of its own for the Wendy’s locations, along with a consortium of its approved franchisees.
NPC International declared bankruptcy in July with more than $900 million in debt. The company has said it wants at least $725 million in any sale. Flynn’s potential sale price gets the company closer to recovering all of the secured debt during the process. The company wants to sell NPC either in whole or in parts.