FAT Brands Inc. (NASDAQ: FAT) shares soared on Thursday after the company announced that it has agreed to acquire the Johnny Rockets restaurant chain. The agreement comes from an affiliate of private equity firm Sun Capital Partners.
Under the terms of the deal, FAT Brands will acquire the Johnny Rocket chain for approximately $25 million. This will be funded through cash on hand and proceeds generated from the firm’s securitization facility.
The deal is expected to be completed in September, and it will bring FAT Brands to over 700 franchised and company-owned restaurants.
Johnny Rockets was founded in the 1980s in California. The chain is known for its 1950s diner-style décor. It has over 325 locations across the United States and internationally, including nine company-owned locations.
[nativounit]
Management noted that similar to its Fatburger chain, Johnny Rockets got its start in Los Angeles. Also, management said that this acquisition is a transformative event for FAT Brands in terms of scale and brand awareness. There is a lot of anticipated synergy with Johnny Rockets and FAT Brands’ current restaurant concepts, and the firm is eager to take the brand to new heights.
With this acquisition, FAT Brands expects to see annual systemwide sales exceeding $700 million.
Excluding Thursday’s move, FAT Brands stock had underperformed the broad markets, with its stock down 22% year to date. In the past 52 weeks, the stock was down closer to 5%.
Also prior to this move, the company only had a market cap of $48.2 million. Now it is pushing closer to $93 million.
FAT Brands stock traded up over 140% on Thursday, at $8.50 in a 52-week range of $1.72 to $10.25.
[recirclink id=728913][wallst_email_signup]
Top Gaining Stocks
Top Losing Stocks