MEMPHIS, Tenn. Back Yard Burgers Inc., franchisor of the namesake regional quick-service chain, has agreed to be acquired for $38 million by a group led by Steve Lynn, a former chairman and chief executive of Sonic Corp. and Shoney's Inc.
Lynn's group agreed to buy publicly traded Back Yard for $6.50 a share, a 29-percent premium over the stock's closing price on Friday. The buyer, BBAC LLC, also indicated that it would repay Back Yard's debt, which is reflected in the group's $38 million valuation of the deal.
BBAC's other principals include Reid M. Zeising, managing partner of Cherokee Advisors LLC, the investment company that manages the consortium, and Pharos Capital Group LLC, a financial advisory concern. The buyer's board of managers includes J. Michael McCarthy, a former executive vice president and chief financial officer of the Waffle House chain, in addition to Lynn, Zeising and Pharos managing partner D. Robert Crants III.
In announcing the deal, Back Yard said its officers and directors had already pledged to vote their shares, or about 27 percent of shares outstanding, in favor of the buyout. The deal will be put to a formal vote at the company's shareholder meeting, which will push the closing to the third quarter, Back Yard said.
Lynn and his group had been negotiating with Back Yard officials since last August to acquire the brand, a southeastern burger chain known for the flame-grilled flavor of its burgers. BBAC had amassed an 8.7 percent stake in the company before it made its initial buyout offer of $6.05 a share.
In Monday's announcement of the deal, Lynn hailed it as "a rare combination of niche status along with a strong regional growth opportunity."
Lattie Michael, Back Yard's longtime chairman and chief executive, suggested in his comments that Lynn's team would likely step up expansion of the chain "The brand will be taken to a much higher level," he said, "the focus on our quality offerings will bring the Back Yard Burgers brand to many new customers."
Back Yard operates or franchises about 180 units in 20 states.