DALLAS Dave & Buster’s Inc., a 49-unit casual-dining and entertainment chain, reportedly has at least six bidders interested in acquiring the chain.
Currently under auction, Dave & Buster’s was put up for sale in February after its owner, private-equity firm Wellspring Capital Management LLC, said it had hired investment bank Jefferies & Co. to explore options. Wellspring purchased Dave & Buster’s in 2006 in a going-private buyout for about $375 million. The private-equity firm has said it had increased Dave & Buster’s earnings before interest, tax, depreciation and amortization, or EBITDA, by more than 30 percent in the two years under ownership.
According to a report today from The Deal, Wellspring is seeking a purchase price of about $600 million and interested parties include: MidOcean Partners LLP, the owners of the quick-service Italian chain Sbarro; Bain Capital Partners, which has invested in Dunkin’ Brands, Burger King and Outback Steakhouse parent OSI Restaurant Partners; Lion Capital LLP, which is based in the United Kingdom and focuses its investments in the consumer sector; and Bear Stearns Merchant Banking, the private-equity affiliate of investment bank Bear, Stearns & Co.
The report did not identify the two other potential bidders, but mentioned that Sun Capital Partners Inc., a turnaround specialist that has acquired numerous restaurant concepts of late, had dropped out of the Dave & Buster’s bidding because the price was too high.
For the 39 weeks ended Nov. 4, 2007, the latest available data, Dave & Buster’s revenue rose 6.7 percent to $390.8 million. Same-store sales increased 4 percent. The company more than doubled its net loss, however, to $11.3 million. Adjusted earnings rose about 23 percent to $53.7 million. The company reported long-term debt of $254.6 million as of Nov. 4.
Dave & Buster’s is expected to report fourth-quarter and full year results on Thursday.
In the current auction, Jefferies has reportedly offered staple financing -- or pre-packaged financing for a bidder -- at about six times Dave & Buster’s EBITDA. About two weeks ago, however, according to The Deal report, Jefferies’ financing hit a snag and GE Capital has stepped in with additional financing at a lower price. The Deal report did not name any sources.
Dallas-based Dave & Buster's operates 49 units in the United States and Canada.