Buffalo Wild Wings (Nasdaq: BWLD) stock jumped 6.5 percent Tuesday after Roark Capital Group announced a $2.4 billion buyout offer for the company worth $157 per share. The price represents a 7.2 percent premium to Monday’s closing price and continues the wave of consolidation in the restaurant industry this year.
Roark Capital is an Atlanta-based private equity firm that owns 62 franchise and multi-unit brands, including popular restaurant chains Arby’s, Hardee’s, Cinnabon, Jimmy John’s and Moe’s Southwest Grill. Roark’s bid was first reported November 14 but wasn’t made official until Tuesday. According to the press release, the deal is expected to close in the first quarter of 2018, and Buffalo Wild Wings will become a privately held subsidiary of Arby’s.
This year has been a huge year for consolidation in the restaurant industry. Organic growth has been difficult to come by, and larger players have opted to turn to buyouts to boost revenue. The Buffalo Wild Wings bid comes roughly a week after activist investor Jana Partners took a large stake in Outback Steakhouse owner Bloomin’ Brands (BLMN) and said it may push for a sale of the company.
According to Bloomberg, there have now been a total of 173 restaurant buyouts in 2017, the most since 2006.
“With restaurant operators facing a highly competitive market for traffic and new unit growth, plus the rising tide of labor, we believe that consolidation may remain a theme as larger companies search for revenue growth and operational leverage,” Canaccord Genuity analyst Lynne Collier said earlier this year.
According to Stephens analyst Will Slabaugh, Roark and Buffalo Wild Wings have some work to do to improve the restaurant’s business.
“We continue to believe the near-term outlook at BWLD remains muted given the ongoing uncertainty with regard to leadership, continued pressure on restaurant-level margins, and lack of near-term momentum, especially on the topline,” Slabaugh says.
Buffalo Wild Wings recently made…
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