Authentic Restaurant Brands, a part of New York-based investment firm Garnett Station Partners, is set to acquire Fiesta Restaurant Group (NASDAQ:FRGI) for $225 million, the Wall Street Journal reported. Fiesta is the parent company of the Pollo Tropical restaurant chain. In the absence of any last-minute obstacles, the deal could be made official today.
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Fiesta’s Potential Sale
The potential sale of Fiesta to Authentic Restaurant Brands is priced at $8.50 per share, which marks a slight premium to FRGI’s closing stock price of $7.86 on Friday. Fiesta’s portfolio comprised 137 company-owned Pollo Tropical restaurants and 30 franchised Pollo Tropical locations in the U.S., Puerto Rico, Panama, Guyana, and the Bahamas, as of the end of the fiscal first quarter. The Pollo Tropical chain is known for its Latin American cuisine.
Fiesta’s revenue increased 8.1% to $103.4 million in Q1 FY23 ended April 2, 2023. However, net loss per share widened to $0.08 per share compared to $0.05 in the prior-year quarter due to higher labor costs and the net impairment and other lease charges mainly related to four underperforming restaurants. The company generated revenue and a net loss of $387.4 million and $14.6 million (or $0.58 per share), respectively, in Fiscal 2022.
The Fiesta acquisition is expected to enhance the portfolio of Authentic Restaurant Brands, which already owns a chain of sandwich shops called Primanti Bros., sport-bar chain PJ Whelihan’s, and Mambo Seafood.
FRGI stock has advanced about 7% year-to-date.
