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Yum! Brands Inc. announced today that it has signed definitive agreements to sell Long John Silver's Inc. and A&W Restaurants Inc. to two separate buyers led by key franchisee leaders.
Both sales are subject to customary closing conditions.
Long John Silver's will be acquired by LJS Partners LLC, led by a group of franchisee leaders and other investors.
A&W will be acquired by A Great American Brand LLC, led by a franchisee leader with substantial interests in international A&W restaurants and the National A&W Franchisees Association.
"We are pleased to announce that we have identified strategic buyers who are passionate about these two great restaurant brands and committed to their growth potential," said David C. Novak, Yum! Brands Inc. chairman and CEO. "As we continue to sharpen our long-term growth focus on international expansion and improving our U.S. brand positions in KFC, Pizza Hut and Taco Bell, Long John Silver's and A&W no longer fit our long-term growth strategy."
The company does not expect the sales to have a material impact on its ongoing earnings or cash flow. Both transactions are expected to close in the fourth quarter.
Goldman, Sachs & Co. acted as exclusive financial adviser to Yum! Brands on the transactions.
Louisville, Ky.-based Yum! Brands announced in January it was seeking buyers for the two brands.
There are 1,630 Long John Silver's and A&W units, some of which are co-branded. The two chains have long struggled to make much of a dent in the parent company's larger portfolio, unlike its sister brands KFC, Pizza Hut and Taco Bell.
The acquisitions may help turn things around for the two brands.
Long John Silver's has been undergoing a rebranding effort this year, including a new "We Speak Fish" marketing tagline, an updated menu and a new logo.
And if A Great American Brand LLC leverages the A&W brand's international reputation, it will also be in good shape. A&W Canada, for example, is the second largest burger chain in that country, behind McDonald's.
Yum!'s major focus continues to be on China, where it opened 500 new restaurants in 2010 and now operates more than 3,500 units in more than 650 cities in mainland.
Yum! outpaces its nearest competitor, McDonald's, by more than 1,000 restaurants in China and is outpacing its development by a 3:1 ratio. Each of Yum!'s brands has great momentum in that country, as the company continues to barrel toward its goal of having a 20,000-unit footprint over the long term.
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