Taco Bell operator Flynn Restaurant Group has agreed to an $816 million purchase agreement to acquire substantially all of NPC International’s assets, which includes more than 1,300 Pizza Hut and Wendy’s restaurants.
Flynn, the largest restaurant franchisee in the U.S., will seek court approval as the stalking horse bidder, or an initial bid that sets the bar prior to an auction. The franchisee also oversees Applebee's, Panera, and Arby’s locations.
“This is a significant step in our restructuring process, and we are very pleased to have reached this agreement with Flynn, which validates the strong value and long-term potential of NPC’s business,” said Jon Weber, CEO and president of NPC’s Pizza Hut division, in a statement. “As we continue to work through the sale process and solicit bids for our assets from other interested parties in accordance with the Court approved bidding procedures, our restaurants across the country will remain open.”
A hearing will take place November 13 to approve Flynn as the stalking horse bidder. NPC will continue to solicit bids and expects to hold a sale hearing on December 4.
Flynn was founded in 1999 and is headquartered in San Francisco. It owns more than 1,200 restaurants in Portland, Maine, and Portland, Oregon.
“We are very excited about the possibility of acquiring NPC’s portfolio of Pizza Hut and Wendy’s restaurants, as well as its Shared Services division,” said Greg Flynn, founder, chairman and CEO of Flynn Restaurant Group, in a statement. “These are great assets and iconic restaurant brands, and we are confident we can maximize the long-term value of the business as we continue to pursue our goal of being the premier franchise group in the restaurant industry.”
NPC filed bankruptcy in July after decreasing sales at Pizza Hut restaurants because of labor, loss of market share, reduced traffic, and a variety of other pressures. The COVID pandemic in March intensified the downward trajectory. The franchisee entered court proceedings with more than $900 million in debt. In August, Pizza Hut and NPC agreed to close up to 300 of NPC’s 1,200 units, most of which were underperforming dine-in stores. The move fit with Pizza Hut’s overall strategy to switch its footprint to off-premises.
Previously, NPC said in court filings that it valued its business at $725 million—$400 for nearly 400 Wendy’s units and $325 for the roughly 900 Pizza Hut stores. Flynn’s purchase would be almost $100 million above the asking price.
Flynn committed to offer employment to substantially all of NPC’s more than 30,000 full and part-time employees.
“An important aspect of the stalking horse agreement is Flynn’s commitment to offer employment to substantially all of NPC’s employees,” said Carl Hauch, CEO and president of NPC’s Wendy’s division, in a statement. “We are pleased that Flynn recognizes the unique value of our team of employees, and we are tremendously proud of the commitment our employees have shown during this challenging year as we navigate the effects of the COVID-19 pandemic."
Wendy’s indicated in an SEC filing that it was participating in court proceedings and evaluating the possibility of putting together a consortium bid with a group of pre-qualified franchisees for the Wendy’s units.