Franchise Group, the parent company of a brand portfolio that includes The Vitamin Shoppe and Pet Supplies Plus, announced a definitive agreement to be acquired by a consortium led by the management group in a deal valued at $2.6 billion. 

WHO: Franchise Group is an owner and operator of franchised and franchisable businesses that continually look to grow its portfolio of brands while utilizing its operating and capital allocation philosophy to generate strong cash flow for its stockholders. Franchise Group’s business lines include Pet Supplies Plus, Wag N’ Wash, American Freight, The Vitamin Shoppe, Badcock Home Furniture & More, Buddy’s Home Furnishings, and Sylvan Learning. On a combined basis, Franchise Group currently operates over 3,000 locations predominantly located in the US that are either company run or operated pursuant to franchising and dealer agreements.

IN THEIR OWN WORDS: “This transaction is an exciting milestone for our company,” said Matt Avril, Chairman of the Board of Directors and the Special Committee of Franchise Group. Mr. Avril continued that “The Special Committee and its advisors conducted an independent process and review of the strategic alternatives available to the Company, with a focus on obtaining the best outcome for public stockholders. We believe the proposed transaction delivers immediate and certain value for public stockholders at a significant premium to the unaffected share price, and we have the flexibility to explore other potential transaction opportunities during the go shop period under the Merger Agreement.”

Brian Kahn, CEO of Franchise Group, stated, “We are excited to have this opportunity to continue our business strategy of partnering with high quality franchisees, operators and financial institutions, while also delivering certain value to our public stockholders despite a challenging business environment.”

DETAILS:

• Members of the senior management team of Franchise Group led by Brian Kahn, the company’s Chief Executive Officer, in financial partnership with a consortium that includes B. Riley Financial, Inc. and Irradiant Partners, will acquire the approximately 64% of the company’s issued and outstanding common stock that the Management Group does not presently own or control. 
• The transaction has an enterprise value of approximately $2.6 billion, including the company’s net debt and outstanding preferred stock.
• Franchise Group Common Stockholders will receive $30.00 per share in cash. The transaction implies 31.9% premium over the unaffected stock. 
• The group reported Q1 revenue of $1.1 billion, a net loss from operations of about $108 million and adjusted EBITDA of $66 million. Franchise Group also reported $1.4 billion in outstanding term debt.
• Upon completion of the proposed merger, Franchise Group will become a private company and will no longer be publicly listed or traded on NASDAQ. Franchise Group’s management team, including Brian Kahn, is expected to continue to lead the company. Franchise Group plans to continue to operate its current portfolio of highly recognized brands.
• Jefferies LLC is serving as financial advisor to the Special Committee and Wachtell, Lipton, Rosen & Katz is serving as legal counsel to the Special Committee. Troutman Pepper Hamilton Sanders LLP is serving as legal counsel to Franchise Group.
• Willkie Farr & Gallagher LLP is serving as legal counsel for Brian Kahn. Sullivan & Cromwell LLP is serving as legal counsel for B. Riley Financial, Inc. Davis Polk & Wardwell LLP is serving as legal counsel for Irradiant Partners.