Party Over! Authentic Restaurant Brands Acquiring Fiesta Restaurant Group

Fiesta Restaurant Group (FRGI), the parent company of Pollo Tropical restaurant brand, has reached a definitive agreement to be acquired by Authentic Restaurant Brands (ARB), a portfolio company of PE firm Garnett Station Partners. ARB is a holding company with a portfolio of food & beverage brands including P.J. Whelihan’s, Primanti Bros. and Mambo Seafood. Quite a diversified portfolio!

The deal, an all-cash transaction, will see Fiesta stockholders receive $8.50 per share, a slight premium over where shares had been trading. Upon closing the transaction, Fiesta will become a privately held company, and Pollo Tropical will continue to operate as an independent brand within ARB’s platform led by Fiesta’s current leadership team.

The transaction is expected to be completed in the fourth quarter of 2023, subject to approval by Fiesta’s stockholders and other customary closing conditions, but the agreement also includes a 30-day “go shop” period so you never know?

The acquisition is seen as a strategic move, providing Pollo Tropical with the scale, resources, and flexibility needed for continued success. ARB, led by industry veterans including Chairman Alex Macedo and CEO Felipe Athayde, expressed enthusiasm for the partnership, believing Pollo Tropical to be a perfect fit for their existing portfolio.

The deal has received unanimous approval from Fiesta’s Board of Directors and has the backing of its significant shareholders, including affiliates of Jefferies Financial Group and AREX Capital Management, who together own around 30% of Fiesta’s outstanding shares.

Long time readers will recall that Fiesta was spun off from Burger King franchise owner Carrols Restaurant Group back in 2012 and it was a very well received spin. The stock more than tripled due to fast growth and strong underlying trends, but in the end, not every fast growing brand turns into the next Chipotle (CMG). The company ultimately sold its Taco Cabana brand for a mere $85M to YTC Enterprises in 2021 to pay down debt and now has sold itself at a price well below its initial spin. Can’t all be winners in the long run.

Disclosure: Author currently holds no position in any stock mentioned.