Fat Brands’ acquisitions are getting bigger.
The owner of Fatburger and Johnny Rockets on Monday said it has a deal to acquire Global Franchise Group, the owner of five concepts including Round Table Pizza, Great American Cookies, Hot Dog on a Stick, Marble Slab Creamery and Pretzelmaker for $442.5 million in cash and stock.
Fat Brands said it would fund the deal with cash on hand and issue the sellers, Serruya Private Equity and Lion Capital, $92.5 million in stock. The deal is expected to close at the end of this month.
Still, the acquisition combines two big franchise companies and will give Fat Brands a total of 2,000 franchise and company-owned restaurants around the world with a combined $1.4 billion in systemwide sales. The company said the acquisition would increase its earnings before interest, taxes, depreciation and amortization by about $40 million per year.
Andy Wiederhorn, Fat Brands CEO, called the deal “a key strategic milestone” for his company and said it would create “a powerhouse restaurant franchising group.”
“We have been very acquisitive in recent years, seeking to add strong and growing restaurant brands to our portfolio,” Wiederhorn said in a statement. “The five new restaurant concepts have been very resilient coming out of the pandemic and will complement our existing brands.”
He said the company would also acquire Global Franchise Group’s manufacturing operations, “which will provide greater efficiencies and incremental revenue opportunities to our company.”
Fat Brands has indeed been acquisitive. The owner of Fatburger went public in a $24 million “mini IPO” in 2017 and in the years since then has acquired numerous franchise brands, many of them small or struggling concepts or both. That started to change last year with its acquisition of the 325-unit Johnny Rockets for $25 million.
This latest deal is far bigger than any of them. Global Franchise Group itself made a couple of acquisitions in prior years, acquiring Hot Dog on a Stick in 2014 and then Round Table Pizza three years later.
Wiederhorn said the goal of acquiring so many concepts—the deal will give his company 13 in all—is to create “synergies” while helping each of its brands sell more franchises.
“Andy has an exciting vision for Fat Brands and through his recent acquisitions, he has been able to create brand synergies within the portfolio while maintaining an asset-light business model,” Michael Serruya, managing director at Serruya Private Equity and chairman at Global Franchise Group, said in a statement.
Duff & Phelps Securities was a financial advisor to Global Franchise Group and Serruya Private Equity. Sheppard, Mullin, Richter & Hampton and Greenberg Traurig was legal counsel for Fat Brands. Bryan Cave Leighton Paisner was legal counsel for Serruya Private Equity and Lion Capital.