Apple American Group LLC, Applebee’s largest franchisee with 269 restaurants, is close to being sold by investor group Weston Presidio to GS Capital Partners, sources close to the deal said Monday.
The sources, who asked not to be named, told Nation’s Restaurant News that North Point Advisors is handling the sale process, which began last fall, and that bids have been competitive, including 10 serious contenders for the franchise group.
Greg Flynn, chairman and chief executive of San Francisco-based Apple American, said Monday he could not comment. Officials with GS Capital Partners, an affiliate of Goldman Sachs, and Weston Presidio did not respond to requests for comment.
According to TheDeal.com, Goldman Sachs signed a letter of intent about a week ago and the deal is likely to be completed within about 45 days. Citing unnamed sources, TheDeal.com estimated the purchase price between $400 million and $500 million, though financial terms are still being worked out.
In a recent interview with Nation’s Restaurant News, Flynn projected Apple American Group would post sales of $700 million this year, saying unit remodels, menu upgrades, and traffic-driving initiatives to build late-night business have brought positive results.
For 2010, Apple American estimated annual sales of $665 million, including annualized sales estimates from 63 new units acquired during that year.
Apple American also has been building its unit count in recent years with the acquisition or construction of more than 125 locations over the past three years. The franchise group currently operates Applebee’s locations in Ohio, Indiana, New Jersey, Delaware, Minnesota, Wisconsin, Pennsylvania, West Virginia, Washington state, California and Nevada. The company employs more than 16,000 people, according to its website.
Apple American has a history with Goldman Sachs. Flynn, who worked previously for Goldman Sachs, founded Apple American in 1998 with the acquisition of eight Applebee’s locations in Washington state.
In 2001, Goldman Sachs helped fund the acquisition of 73 Applebee’s units with a $50 million investment, taking majority control. Weston Presidio then acquired the franchise group from Goldman Sachs in 2005 for an undisclosed amount.
The 2,000-unit Applebee’s brand is owned by Glendale, Calif.-based DineEquity Inc., which also is the parent company of IHOP. DineEquity declined comment on the deal.
If completed, the Apple American deal would join a growing list of restaurant companies that have changed hands in recent months.
Last month, Hooters of America Inc. completed its sale to an investor group led by Chanticleer Holdings Inc. in a deal that also included the casual-dining chain’s largest franchisee Texas Wings Inc.
The Crumbs Bake Shop cupcake chain was acquired for $66 million and taken public in a deal slated to close in March. Tavistock Restaurants LLC is in the process of acquiring the Back Bay Restaurant Group of Boston in a deal scheduled to close in late February.
Carlson Restaurants Inc. sold its Pick Up Stix chain to Lorne Goldberg, the owner of the Leann Chin and Mandarin Express brands. Landry’s Restaurants Inc. last year acquired the Bubba Gump Shrimp Co., Claim Jumper and Oceanaire Seafood Room chains.
Other major restaurant companies are seeking buyers for some of their brands. Wendy’s/Arby’s Group Inc. has said it is exploring a possible sale of the Arby’s brand, while Yum Brands Inc. said it will sell its A&W All American Food and Long John Silver’s brands to focus on growth of core concepts KFC, Pizza Hut and Taco Bell.
Contact Lisa Jennings at [email protected]