SAN FRANCISCO — Friedman Fleischer & Lowe LLC (FFL), a leading San Francisco-based private equity firm, has confirmed that an affiliate of the firm has entered into a definitive agreement to acquire Church's Chicken from Arcapita Bank B.S.C., a global investment firm headquartered in Bahrain.
The transaction was led out of Arcapita's office in Atlanta and is expected to close within 30 days, subject to normal closing conditions. Terms of the transaction were not disclosed.
Church's Chicken is one of the world's largest quick-service chicken restaurant concepts, with more than 1,600 outlets worldwide.
Under Arcapita's ownership, the company has increased margins, expanded the store base and added new markets in the United States, Latin America, the Arabian Gulf, the United Kingdom, Russia and India. It also has recorded earnings growth of almost 60 percent and now generates over $1.2 billion of global system sales annually.
Arcapita's affiliates acquired Church's Chicken in December 2004 from AFC Enterprises Inc. and financed the purchase through a mix of senior financing, common equity, and a sale and leaseback of the company's real estate. In spite of the difficult market and economic conditions of the last 18 months, the completion of this exit generates an attractive return for Arcapita's investors.
Stockton Croft, head of Arcapita's U.S. Corporate Investment Group, said, "At the time of acquisition, we brought in a new, highly experienced management team led by CEO and president Harsha V. Agadi. This team has successfully increased same store sales every year, improved the quality and number of stores in the U.S., and accelerated international expansion. Maintaining earnings growth through the last 12 months is clear testimony to the robust nature of the company's business."
The Church's management team will be rolling over significant equity to support their belief in the long term growth opportunity for Church's Chicken.
The transaction has been successful in attracting a new senior debt package, as well as equity and mezzanine financing from the buyer. Senior financing on the transaction is being provided by a syndicate led by Bank of America, Golub Capital and Wells Fargo as well as some of Church's Chicken's existing lenders, according to a news release.
