Fast casual restaurant chain operator FAT Brands Inc. (FAT) recently revealed that it has agreed to acquire Arizona-based restaurant chain operator Native Grill & Wings for $20 million from Wingtime, LLC, a subsidiary of Cybeck Capital Partners.
The deal is likely to conclude in the mid of December 2021. FAT Brands will fund the deal with cash from the issuance of new notes from the company’s securitization facilities.
Following the news, shares of the company rose 4.5% to close at $11.49 in the extended trading session on Monday.
Implications of the Deal
The buyout will lead to FAT Brands now owning over 2,300 franchised and corporate-owned stores around the world and a combined annual system-wide sales of about $2.3 billion. Further, the acquisition will enable the company to increase its post-COVID normalized EBITDA by about $3 million in 2022.
Management Commentary
The CEO of FAT Brands, Andy Wiederhorn, said, “Native Grill & Wings has been on our radar for some time given its ability to remain nimble and deliver strong system-wide sales growth over the past year. We’re pleased to build off the success established by Dan Chaon, Native brand CEO, and Cybeck Capital Partners, LLC, and we look forward to expanding Native Grill & Wings’ presence into new markets.”
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Price Target
Recently, Noble Financial analyst Joe Gomes reiterated a Buy rating on the stock with a price target of $25 (117.6% upside potential).
Overall, the stock has a Moderate Buy consensus rating based on 1 Buy. Shares have gained 110.8% over the past year.
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