Should we expect an Arby's-style turnaround at Sonic if this deal goes through? Shareholders seem happy with the prospect.
— Kristen Hawley
Arby’s operator Inspire Brands Inc. will acquire Sonic Corp. in a deal valued at about $2.3 billion as the fast-food burger wars heat up.
Inspire, whose chains also include Buffalo Wild Wings and Rusty Taco, will continue to operate Sonic as an independent brand, according to a statement. The deal, which was unanimously approved by Sonic’s board, represents a 19 percent per share premium to Sonic’s closing price on Monday, the company said. Inspire will assume Sonic’s net debt.
Sonic shares surged as much as 23 percent to $44.87, above the per-share offer of $43.50, on Tuesday after an earlier halt on trading was lifted. The stock had jumped about 33 percent so far this year through Monday’s close.
The deal would significantly expand Inspire’s footprint, adding more than 3,600 Sonic locations to the 4,700 restaurants it already operates. For comparison, that’s more than Burger King in the U.S.
Sonic is the latest struggling chain to be acquired by Inspire, which is credited with mounting a turnaround at sandwich chain Arby’s. Sonic, squeezed by competition from larger rivals Burger King and McDonald’s Corp., has posted declining same-store sales for eight consecutive quarters. The chain relies on cheap drinks, catchy commercials and promotions to lure customers, and it’s struggled to stand out in a crowded restaurant space.
Inspire was co-founded by Paul Brown of Arby’s and Neal Aronson, who started Roark Capital Group. Last year, Arby’s — which is majority owned by Roark — agreed to buy restaurant chain Buffalo Wild Wings for about $2.4 billion, adding it to the private equity firm’s stable of eateries. Last month, Wendy’s Co. agreed to sell its stake in Inspire, marking another ownership change in a rapidly shifting restaurant industry.
The transaction is still subject to the approval of Sonic shareholders.
–With assistance from Anne Riley Moffat.
©2018 Bloomberg L.P.
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