Luby’s Inc. said Friday it is buying Fuddruckers Inc. and parent Magic Brands LLC for $61 million in cash, besting an earlier $40 million bankruptcy court bid by Tavistock Restaurant Group.
Houston-based Luby’s was declared the successful bidder for 60 Fuddruckers gourmet-burger units and three Koo Koo Roo locations in a Chapter 11 bankruptcy auction Thursday. A Luby’s spokesman Friday said the company would not comment further until a final approval at a hearing Tuesday in the U.S. Bankruptcy Court in Delaware.
The deal is expected to close on or before July 9.
In addition to the $61 million, which Luby’s said it would fund from cash and an expansion of its credit facility, the cafeteria company agreed to assume some Fuddruckers’ obligations, real estate leases and contracts and pay an additional $2.45 million if some contracts were not assumed.
When it filed for bankruptcy protection on April 21, Austin, Texas-based Magic Brands LLC and Fuddruckers Inc. said it would close 24 of its 85 corporate Fuddruckers units, and evaluate the then-13-unit Koo Koo Roo chain.
None of Fuddruckers’ 135 franchised locations were included in the bankruptcy filing, Luby’s said.
Pete Large, chief executive of Magic Brands, said in a statement: “Luby's has the capacity to support and grow the Fuddruckers brand which we believe will be to the benefit of both our corporate restaurants and franchisees.”
Luby’s operates 96 cafeterias, mostly in Texas. Luby's Culinary Services division, created over the past two years, provides foodservice management to 17 sites in health care, higher education and corporate facilities.
Tavistock Group, through Tavistock Restaurants LLC, owns several fast-casual and casual-dining brands, including the 32-unit Freebirds World Burrito chain, and such other concepts as ZED451, Cafe del Rey, Napa Valley Grille, Blackhawk Grille and California Café.
Contact Ron Ruggless at [email protected]