TGI Fridays is poised to become a public listed company again after its parent company, TGIF Holdings, agreed a sale to blank check company Allegro Merger Corp in a deal worth $380m (£297m).
Blank check companies are typically listed organisations with no operations that raise money from investors via an IPO for acquisitions.
TGIF’s holders will receive a combination of cash and stock valued at $30m (£23m) and Allegro will assume approximately $350m (£270m) of net debt.
TGI Fridays has become a leader in international restaurant franchising with more than half of its 840 branches located outside of the US. It operates around 85 in the UK.
Licensing accounts for over 70% of total profitability, according to the casual dining bar and grill concept, which was founded in 1965.
Last year the business generated sales of approximately $2 billion (£1.54m) and the average annual unit volume (AUV) was around $2.7m (£2.08m)
Within the past year, Fridays has made substantial improvements to its management team, bringing in CEO Ray Blanchette, a 19-year company veteran who previously led the successful turnaround and subsequent IPO of Ignite Restaurant Group.
Subsequently, he brought both John Neitzel and Jim Mazany back to Fridays to run franchising and company stores, respectively.
“The first order of business when I took over this company was to bring in the best talent to improve operations and innovation,” he explained. “This transaction is the next significant strategic move, and will allow us to gain public company status and access incremental equity capital to accelerate the rejuvenation of this iconic global brand.”
Eric Rosenfeld, CEO of Allegro, which was incorporated two years ago, said: “Allegro’s board and I believe that Fridays is an unparalleled iconic international brand and we are excited to be able to bring this opportunity to our shareholders.
“Fridays’ highly predictable stream of franchise and licensing revenue is very attractive and we believe that Fridays provides a compelling value to our shareholders.”
News of the sales comes as TGI Fridays prepares to transition to a new management team in the UK. Long-serving chief executive Karen Forrester is set to depart in December after 12 years and will be replaced by former Virgin Active boss Robert Cook.
By ANDREW SEYMOUR