Church's Chicken Changing Hands in Estimated $300M Deal
(SAN FRANCISCO, CA) -- Chicken feed it's not.
Church's Chicken, a 57-year-old pioneer in the quick-service sector of the fast-food industry, is being bought by an affiliate of Friedman Fleischer & Lowe, a private equity firm based in San Francisco.
Terms of the deal were not disclosed. But industry insiders estimate the transaction will be valued at about $300 million when it closes in late July.
Why the deal was being done at this time was also not disclosed in a prepared statement by David L. Lowe, vice chairman, Friedman Fleischer & Lowe, and Harsha V. Agadi, chairman and CEO of Church's Chicken.
Arcapita Bank B.S.C.(c), a global investment firm headquartered in Bahrain, owns Church's Chicken. Arcapita bought Church's Chicken in 2004 for $390 million from AFC Enterprises, the parent company of Popeye's Chicken.
The company annually generates about $1.2 billion in revenue from 1,600 locations in 22 countries, with about 400 outlets outside of the U.S., according to ThomsonReuters' peHUB.
Church's Chicken's annual revenues have grown 8 percent to 10 percent during the Recession, as consumers trade down to less expensive dining, industry sources point out.
Bank of America (BAC.N) will join two other co-lead arrangers to put up debt worth roughly 40 percent of the transaction, in addition to a revolver loan, according to peHUB.
Founded in San Antonio, TX in 1952, the firm's fried chicken concept operates under two brands worldwide: Church's Chicken and Texas Chicken.
Friedman Fleischer & Lowe says it has about $2.5 billion under management that is focused on investing in U.S. middle-market companies.
Vice chairman Lowe says FFL's strategy since its formation in 1998 is to invest in companies 'where the substantial strategic and operating expertise of FFL's principals can help management improve margins, make acquisitions and grow earnings."
Previous investments in the consumer products industry include Tempur-Pedic International, Discovery Foods and Milestone AV Technologies.
Other major investments include CapitalSource, Korn/Ferry International, Guardian Home Care and GeoVera Insurance Group.