Rhone Capital to buy Fogo de Chao for $560M

The take-private deal comes less than three years after Fogo went public.

Fogo de Chao has agreed to a $560 million acquisition offer from the private-equity group Rhone Capital, the company said on Tuesday.

The $15.75-per-share acquisition represents a 25.5% premium over the Dallas-based chain’s share price as of close on Friday.

The private-equity group Thomas H. Lee Partners, which still owns a controlling 60% of Fogo shares, also approved the deal, which comes less than three years after it took the Brazilian steakhouse chain public.

“After a thorough evaluation of the options available, the board of directors is confident that this transaction will provide Fogo a significant opportunity to realize the highest value for our stockholders while providing the best path forward for the Fogo de Chao brand, employees and loyal customers,” CEO Larry Johnson said in a statement. He said that Rhone has a “distinguished track record of supporting and driving profitable growth for companies around the world.”

Fogo had been undertaking a review of strategic alternatives. The 48-unit chain has generally struggled to win over investor favor since its 2015 IPO—rarely trading above $15 a share since the weeks after the offering.

The restaurant IPO market has been weak since then, which likely played a role in Thomas H. Lee’s decision to sell the company rather than exit its investment through secondary stock offerings that might not have yielded a price as high as the one Rhone is paying.

Rhone gets a relatively unique chain with locations that have unit volumes of about $8 million, with high check averages and sizable profit margins. The chain’s U.S. same-store sales increased 2.1% in the quarter ended Oct. 1, according to Fogo’s most recent earnings report.

“We believe our firm’s global experience, relationships and longstanding and expanding presence in Brazil is a natural complement to the company and will serve to facilitate Fogo’s domestic and international expansion plans,” Eytan Tigay, Rhone's managing director, said in a statement.

Rhone has more than $5 billion in assets under management and owns companies in a wide variety of industries, including aviation, consumer products, food, packaging, retail and others.

The sale is expected to close this spring.

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