Del Frisco’s Restaurant Group nearing a sale to L Catterton

The private-equity firm is paying $8 per share in an all-cash deal valued at $650 million.
Photograph: Shutterstock

Del Frisco’s Restaurant Group has reached an agreement on a sale to private-equity firm L Catterton, the company announced Monday.

L Catterton is paying $8 a share in cash for the Irving, Texas-based company, giving Del Frisco’s a valuation of $650 million, according to a release Monday. That’s a 22% premium over Del Frisco’s closing price on Dec. 19, when the company announced its sale process.

It’s also 19% higher than the closing price on Friday.

L Catterton, a frequent buyer of and investor in restaurant chains, is buying all of Del Frisco’s assets. Sources told Restaurant Business that talks intensified late last week and that an agreement was reached over the weekend. RB reported Sunday night that a deal was imminent.

“L Catterton brings a distinguished track record of fostering the growth and success of world-class experiential brands,” Del Frisco’s CEO Norman Abdallah said in a statement.

L Catterton would likely split the company’s two growth chains, Barcelona Wine Bar and Bartaco, from the two steakhouses, Del Frisco’s Double Eagle and Del Frisco’s Grille. Barcelona and Bartaco would then be operated along with one of L Catterton’s other growth companies—upscale Mexican chain Uncle Julio’s.

Darden Restaurants, which was previously said to be a bidder for Del Frisco’s, was “never that interested” in buying the casual-dining operator, sources said.

Del Frisco’s has been on the market for much of the year, pushed by activist investors that have soured on the company’s performance, particularly since Del Frisco’s used debt to pay $325 million for Barteca Restaurant Group, owner of Barcelona and Bartaco.

Del Frisco’s has more than $330 million in long-term debt.

But how it would be sold has also been a question. The company was considering selling some or all of the business, with some buyers targeting either Barcelona or Bartaco or others taking just the steak chains, with proceeds used to pay off the debt.

The company has lost more than half of its value since it announced the Barteca acquisition. Activist investor Engaged Capital urged Del Frisco’s to explore a sale last December, taking the company to task for its debt level and financial performance. Engaged argued that Del Frisco’s concepts would be attractive to investors.

Last month, Del Frisco’s announced plans to lay off 12% to 15% of its staff in an effort to cut costs by $5 million a year.

The company operates 78 restaurants among its various brands, and first-quarter same-store sales rose 1.3% at all of its brands.

In Del Frisco’s, L Catterton would get a handful of chains to add to the collection of restaurants in which it has an interest.

The firm has been an active buyer and investor in restaurant chains over the years, including Punch Bowl Social, Noodles & Co., Piada Italian Street Food, Hopdoddy Burger Bar and several others in addition to Uncle Julio’s.

Irving, Texas-based Uncle Julio’s finished 2018 with 35 locations and $214.5 million in system sales, up 14% from the year before. L Catterton acquired the chain in 2017.

UPDATE: This story has been updated to add deal terms following the announcement of the agreement.

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