Buffets and Ryan’s Restaurant Group to Combine in $876 Million Transaction
Business Wire News
Buffets and Ryan's Restaurant Group to Combine in $876 Million Transaction, Creating Nation's Largest Buffet Restaurant Chain; Combined Company to Operate Approximately 675 Restaurants in 42 States
Ryan's Shareholders to Receive $16.25 Per Share in Cash
Buffets, Inc., a leading owner and operator of buffet-style restaurants, and Ryan's Restaurant Group, Inc. RYAN, the leading publicly traded buffet operator, today announced the signing of an agreement under which a subsidiary of Buffets will merge with Ryan's in a cash transaction valued at approximately $876 million, including debt that will be assumed or repaid at or prior to closing. Buffets is owned by an investment partnership organized by Caxton-Iseman Capital, Inc., a New York-based private equity firm, and the senior management of Buffets.
The transaction will create the nation's largest buffet restaurant chain and one of the five largest companies in the casual and mid-scale dining segment. The combined company will have annual revenues of more than $1.7 billion, a national footprint, and operate approximately 675 restaurants principally under the well-respected Ryan's(R) Grill, Buffet & Bakery, Fire Mountain(R), Old Country Buffet(R) and HomeTown Buffet(R) brands.
Under terms of the agreement, which has been unanimously approved by the boards of directors of both companies, Ryan's shareholders will receive $16.25 in cash for each common share they own, representing an approximate 45% premium over Ryan's closing share price on July 24, 2006.
The combined company will continue to be called Buffets, Inc. and will continue to be headquartered in Eagan, Minnesota. Ryan's will operate as a separate division of Buffets and will continue to be based in Greer, South Carolina. R. Michael Andrews, Chief Executive Officer of Buffets, will continue to serve in this capacity for the combined company, which will have approximately 43,000 employees.
Mr. Andrews said: "Our combination with Ryan's is an outstanding opportunity for Buffets, as we are combining two complementary businesses from a geographic, operational and cultural perspective. Ryan's leading position in the South will balance Buffets' leading position in the North and West, allow for continued brand development in our core markets and provide further opportunities for geographic expansion. As one company, we will capitalize on opportunities in purchasing, marketing and restaurant operations. Most importantly, the people of both companies - from senior management to the store level staff - share a deep commitment to creating positive dining experiences for our customers on a daily basis, and providing an enjoyable and rewarding workplace for our employees.
"We are excited about the opportunity to work together with the Ryan's team to apply best practices from each company across our organization. We expect that the result of our efforts will be a national restaurant chain even better positioned to provide its millions of customers with delicious meals at a great value in a family oriented environment," Mr. Andrews concluded.
Charles D. Way, Chief Executive Officer of Ryan's, said: "Since opening its first restaurant in 1978, Ryan's has strived to serve great meals to our loyal customers, to be a great place for our employees to work and to create value for our shareholders. In joining forces with Buffets, we have found a partner committed to each of these principles. Buffets respects the heritage of our brands and, like Ryan's, has a long history of great customer service and treating its employees as partners in its success. Importantly, we believe this transaction will deliver substantial value to our shareholders, whom we thank for their support. Our entire team is committed to working with the Buffets leadership to complete a successful integration."
Steven M. Lefkowitz, a Managing Director of Caxton-Iseman, said: "We are pleased to back this outstanding management team led by Mike Andrews in an exciting growth initiative. The Ryan's management team has done an impressive job developing two outstanding brands, and we look forward to building on their success. We believe the combination of these businesses brings together the assets, skills and resources to create a new entity that is greater than the sum of its parts. Mike and his colleagues have our full support as they work to further strengthen the company for the benefit of our employees, customers and their communities."
Completion of the transaction, which is expected to occur in the fourth quarter of 2006, is subject to approval by Ryan's shareholders, regulatory approvals, receipt of financing and other customary closing conditions.
It is anticipated that the transaction will be funded through a combination of bank debt, senior subordinated debt and real estate financing, which will result in a full refinancing of Buffets' and Ryan's existing debt. The debt financing for the transaction has been committed by Credit Suisse Securities (USA) LLC and UBS Securities LLC, and the real estate financing has been committed by affiliates of Fortress Investment Group LLC.
Buffets' financial advisor with respect to this transaction is Berenson & Company, LLC, and its legal advisor is Paul, Weiss, Rifkind, Wharton & Garrison LLP. Ryan's financial advisor with respect to this transaction is Brookwood Associates, LLC, and its legal advisor is Wyche, Burgess, Freeman & Parham, P.A.