Frisch’s Restaurants Inc. has reached a deal to sell the company to NRD Partners I LP, a new private-equity fund focused on franchises, for $34 a share, or $175 million, the company said Friday.
The per-share price is a 21-percent premium on Frisch’s closing price Thursday, and represents a multiple of 7.4x trailing earnings before interest, taxes, depreciation and amortization, or EBITDA. The deal is expected to close by September.
After the deal is complete, Frisch’s CEO Craig Maier and vice president of marketing Karen Maier will retire, but remain franchisees of the Cincinnati-based company, which operates Frisch’s Big Boy restaurants in the Midwest. Craig Maier has been CEO since 1989, and his family had been at the helm of the company for 76 years.
“We are pleased to have reached an agreement that maximizes value for our shareholders and ensures the iconic Frisch’s restaurants can continue to provide a full-service family dining experience to our guests,” Craig Maier said in a statement. “This is the culmination of over two years of strategic planning, and this is the right transaction for the company. Frisch’s has been a family-operated business since my grandfather opened our first drive-in in 1939. On behalf of my entire family, I’d like to thank our loyal customers for allowing us to serve them ever since.”
The deal is the first major acquisition by NRD Partners, which was started by Aziz Hashim, a former multiconcept franchisee who is targeting small and mid-sized franchisors. The fund plans to use its leaders’ expertise to grow the brands.
“Frisch’s restaurants are among the most classic and adored family restaurants in the country,” Hashim said in a statement. “We are excited to have an opportunity to acquire and implement our franchise growth strategy with this beloved concept.”
Frisch’s operates 95 company-owned locations and has 26 franchised units. The company owns the rights to the name “Frisch’s,” and owns the “Big Boy” trademark in Kentucky, Indiana and most of Ohio and Tennessee.
Same-store sales rose 4 percent in the first nine months of the company’s fiscal year ended March 10, to $161.7 million, from $155.6 million the previous year. Net earnings for the first nine months were $7.4 million, a 25-percent increase from the previous year. Same-store sales rose 4.8 percent in the third quarter.
Earlier this year, Frisch’s filed a civil lawsuit against its former assistant treasurer, charging the officer with taking $3.3 million from the company over several years.
Frisch’s is being advised by Raymond James & Associates as financial advisor and Cummins & Brown LLC as legal advisor.