Restaurant chain Denny’s announced that a private equity group will acquire it for approximately $620 million. They entered a definitive agreement to be acquired by a group that includes TriArtisan Capital Advisors LLC, Treville Capital Group, and Yadav Enterprises. The unanimously approved agreement states that Denny’s shareholders will receive $6.25 per share, a 52.1% premium to their closing stock.

Reasons for Acquisition

• Wave of Private Equity Buyouts: This acquisition is the latest in a series of private equity buyouts of restaurant chains in recent years. Other chains, such as Subway and Dave’s Hot Chicken, have made similar acquisitions in the last two years. This comes down to the nature of restaurant franchises and their ability to offer organic growth, the freedom to expand, and acquisition opportunities.

• COVID-19 Struggles: Denny’s, and many other restaurant chains, began to struggle during the COVID-19 pandemic. Restrictions forced locations to restrict hours or close temporarily. As Denny’s is known for being open 24/7, this restriction was problematic for the business.

• Competitive Market: Quick-growing restaurant chains such as First Watch and Keke’s Breakfast Cafe create a competitive market for breakfast restaurants like Denny’s. Additionally, economic struggles mean many would-be customers are opting to eat cheaper fast food or stay at home entirely. 

Conclusion

Denny’s was reached out to by over 40 potential buyers. They received multiple offers, but ultimately decided to go with this transaction, because it “maximizes value and has determined it is fair to and in the best interests of stockholders and represents the best path forward for the company”. This decision is an integral part of the business’s turnaround plan, as it attempts to keep up with an evolving market.

Want to make the best decisions for your business like Denny’s? Contact Stony Hill Advisors today to speak to an experienced M&A advisor.