J. Alexander’s Holdings, Inc., parent company of J. Alexander’s, Redlands Grill, Stoney River Steakhouse and Grill, and Lyndhurst Grill, announced it entered into a definitive agreement to acquire 99 Restaurants, LLC in an all-stock transaction valued at about $199 million.
Fidelity National Financial, Inc., J. Alexander’s, Fidelity Newport Holdings, LLC, and Fidelity National Financial Ventures, LLC—FNF’s private-equity subsidiary—agreed to a deal where J. Alexander’s will assume ownership of 106-unit Ninety Nine Restaurant & Pub via merger where the brand will become a wholly-owned subsidiary of J. Alexander’s Holdings, LLC. The deal is expected to close in the fourth quarter.
“The team has weathered the casual dining headwinds very well and has posted same store sales growth over the last few years that has outperformed the market. They have a regional menu supported by a strong value proposition with a heavy concentration of restaurants in Massachusetts and the other New England states,” said Lonnie J. Stout II, president and chief executive officer of J. Alexander’s, in a statement.
Based in Woburn, Massachusetts, The Ninety Nine Restaurant & Pub began in 1952 and currently operates in seven states within the New England area. The casual dining brand features a value-oriented menu focused on soups, salads, sandwiches, burgers, beef, chicken, and seafood entrees, as well as a full bar.
The deal includes the assumption of $20 million in net debt. Fidelity Newport Holdings LLC, which is the operator of Ninety Nine Restaurant and Pub, will trade its ownership interest for common-share equivalents of J. Alexander’s Holdings Inc.
According to the release, “J. Alexander’s will cause to be issued to FNF and FNFV, collectively, a total of 16,272, 727 shares of J. Alexander’s Class B Common Stock, which will be a newly authorized, non-economic class of stock entitled to one vote per share, and 16,272,727 Class B Units of J. Alexander’s Holdings, LLC [which units will be exchangeable for shares of J. Alexander’s Class A common stock on a one-for-one basis, and upon such exchange a corresponding number of shares of Class B Common Stock will be cancelled].”
Following the transactions, FNH and FNFV will own about 52.5 percent of the outstanding shares of capital J. Alexander’s stock.
Additionally, “$60 million of 99 Restaurant’s indebtedness will be outstanding at closing, and $40 million of such indebtedness will be repaid immediately following the closing with the proceeds of a pre-closing cash contribution to 99 Restaurants by FNFV, resulting in $20 million of net debt to be assumed by J. Alexander’s in connection with the transactions,” the release said.
FNF nonexecutive chairman William Foley will join J. Alexander Holdings, Inc.’s board of directors. The company said no other changes it its board of directors or executive officers is expected. Shareholders will vote on the merger in the fourth quarter.
“Ninety Nine Restaurant & Pub is a well operated concept. Founded in 1952, they are a strong regional competitor in the New England market with 106 restaurants currently in operation. They have a culture very similar to ours in that they are committed to outstanding guest service and putting employees first. Led by president Charlie Noyes, Ninety Nine has a tenured and deep management team,” Stout said in a statement.
Stout added that Ninety Nine Restaurant & Pub generated more than $300 million in total net revenue in 2016 with an average check, including alcoholic beverages, of $15.82, and “will help us with scaling our business.”
“We believe this transaction will be significantly accretive to our earnings in 2018. We believe this additional scale and liquidity will benefit all of our existing shareholders. Our board has been narrowly focused on creating shareholder value. We believe the Ninety Nine acquisition is a key step in that direction,” he said.