How much will restaurant-chain collector Tilman Fertitta pay for brands he really, really wants? Information leaked from the billionaire’s most recent shopping spree reveals he spent in excess of $300 million for two of his most recent prizes, the polished-casual concepts Del Frisco’s Double Eagle Steakhouse and Del Frisco’s Grille.
Fertitta revealed the acquisitions on the same day he also bagged Restaurants Unlimited, a bankrupt collection of mixed concepts he got for $37 million because no one else even made an offer on the 30 restaurants, according to court documents.
The Del Frisco’s brands have been on Fertitta’s wish list for years. It’s a desire not widely shared, judging from securities filings pertaining to the sale of Del Frisco’s Restaurant Group (DFRG), the public company that owned the brands until it was sold last week to giant private-equity firm L Catterton Partners in a $650 million deal. The purcgase included not only the Del Frisco’s chains, but also the growth concepts Bartaco and Barcelona, which DFRG purchased in May 2018 for $325 million.
Those two younger brands were the ones strategic and private-equity buyers wanted most, the securities documents show. DFRG’s financial adviser, Piper Jaffray, contacted 99 companies it believed would be interested in buying DFRG. That number quickly dropped to 11 prospective bidders, including L Catterton; five of them, including L Catterton, expressed an interest in buying Bartaco, Barcelona or both, at prices ranging from $280 million to $355 million for the pair. The two chains have 38 locations in total.
The identities of the unsuccessful bidders were not revealed in the SEC filings. But the securities documents noted that DFRG CEO Norm Abdallah had worked for one of them between 2010 and 2013. Abdallah’s LinkedIn page indicates he was employed at that time by Romano's Macaroni Grill, now a holding of investment group Redrock Partners.
Another suitor—Party L—came forward for a later round of bidding. The lone strategic potential buyer among the four parties left at that point, it bid $315 million in cash to buy just the dual Del Frisco’s operations, which extend to 40 locations.
Party L and two other tire-kickers fell away, leaving just L Catterton offering a deal for DFRG, for $8 a share. DFRG asked that the bid be sweetened to $8.50, but the private-equity firm refused, and DFRG accepted the offer.
Simultaneous with closing on DFRG, L Catterton flipped the Double Eagle and Grille groups to Fertitta’s Landry’s operation. The price and other terms were not disclosed.
Reuters reported Wednesday that Jefferies, the financial services company, had provided Fertitta with $300 million in debt financing to buy the pair. The figure suggests the restaurateur and TV star paid at least that much. The lowest offer presented to DFRG for the sister brands after extensive due diligence was $315 million.
Fertitta got his prizes, raising his debt in the process. Two years ago, he borrowed $1.4 billion at 8% interest to buy the Houston Rockets NBA franchise for $2.2 billion, the highest price ever paid for a pro basketball team.
With the addition of the Del Frisco’s operations and Restaurants Unlimited’s 16 brands, Fertitta’s empire now encompasses 73 concepts. He also owns the Golden Nugget casino business, several entertainment centers and a few technology companies.