Restaurant Brands International, the parent company of Burger King and Tim Hortons, agreed to acquire Popeyes Louisiana Kitchen for $1.8 billion.
With the purchase, Restaurant Brands International (RBI) will have more than 23,000 restaurants worldwide, and the acquisition presents a significant expansion opportunity for Popeyes both in the U.S. and internationally.
“We think there are decades of exciting growth for the brand and its franchisees in this country,” RBI’s CFO Joshua Kobza said in a conference call Tuesday announcing the acquisition.
Popeyes has more than 2,600 locations worldwide, with the majority of company owned and franchised restaurants located in about 11 states. Nearly 98 percent of the brand’s locations are franchised.
Kobza says RBI expects to brand’s growth to accelerate in international markets, with numerous development agreements signed within the last three years. Popeyes has 621 international franchised stores, representing about 4 percent of the 16,437 KFC units, which RBI says is Popeyes largest competitor.
Popeyes’ average revenues are around $1.4 million per U.S. restaurant and average restaurant sales have increased each year since 2008. The New Orleans-based brand was founded in 1972 and will continue to be managed independently in the U.S. following the acquisition.
“The key to long-term success for all of our brands will be to focus on driving guest satisfaction and franchisee profitability,” Schwartz says.
Under the terms of the transaction, Popeyes shareholders will receive $79 cents in cash per share at closing, which represents a premium of 27 percent based on Popeyes' 30-trading day Volume Weighted Average Price as of February 10, the last trading day before media speculation on the potential sale of Popeyes.
“As Popeyes enters its 45th year, its success reflects the amazing brand entrusted to us by founder Al Copeland, Sr. and the unique high trust partnership that we enjoy with our franchise owners,” Popeyes CEO Cheryl Bachelder says in a statement. “RBI has observed our success and seen the opportunity for exceptional future unit growth in the U.S. and around the world. The result is a transaction that delivers immediate and certain value to the Popeyes shareholders."
By Alex Dixon