Ignite Restaurant Group Inc. said Wednesday it had agreed to acquire the 210-unit Romano’s Macaroni Grill casual-dining chain from Golden Gate Capital for about $55 million.
Ignite executives said the brand itself is strong and that underperforming Macaroni Grill locations would offer real estate conversion options for Ignite’s Joe’s Crab Shack and Brick House Tavern + Tap casual-dining brands.
Houston-based Ignite, which is publicly traded, said the all-cash deal would be funded through a $50 million increase in Ignite’s existing credit facility. The company said it expected to close the deal in the late second quarter of 2013.
Dallas-based Brinker International Inc., which has held a minority stake in Macaroni Grill since it closed its $88 million sale of the brand to Golden Gate in December 2008, said its investment was part of the transaction.
For the year ended Dec. 31, Macaroni Grill’s revenues were about $385 million, and average unit volumes were about $2.1 million, Ignite said in a press release.
Ray Blanchette, Ignite’s president and chief executive, said the Macaroni Grill casual-dining position fit well with the company’s 129 Joe’s Crab Shack and 15 Brick House units, and that Ignite was “bullish” on the acquisition. The Macaroni Grill concept has the potential to be a “premium” and “polished” Italian concept, he added.
Blanchette also said the “strong base” of Macaroni Grill locations would give Ignite flexibility in real estate conversions, which it has used in its current Joe’s and Brick House units. “We’re bringing in a massive portfolio of real estate and giving ourselves a lot of strategic alternatives,” he said in a conference call with analysts.
Macaroni Grill was founded by Phil Romano in 1988 and later sold to Brinker International. Currently, the Italian-themed concept has 186 company-owned units and five franchised restaurants in 36 states. Macaroni Grill also has 19 units in nine U.S. territories and other nations.
“We believe that our operations, brand management and real estate portfolio strengths provide tangible opportunities to elevate the brand experience and drive shareholder value,” Blanchette added.
“We are excited that this acquisition will transform Ignite into a company with three high-quality casual-dining brands, almost $1 billion in revenues and significant earnings growth potential over time,” he said.
Josh Olshansky, managing director of Golden Gate, said in a statement: “We are pleased with the outcome of our successful investment in Macaroni Grill and believe the company is well-positioned for the future.”
Michael Dixon, Ignite’s senior vice president and chief financial officer, said the Macaroni Grill acquisition costs would be about $8 million, with $7 million within the first six months of closing. Those costs include legal, accounting and bank fees, as well as integration costs such as relocation and severance.
KeyBanc Capital Markets is serving as exclusive financial advisor to Ignite.
San Francisco-based Golden Gate Capital, a private-equity investment firm, has a number of retail-sector investments, including restaurant brands California Pizza Kitchen and On the Border Mexican Grill and Cantina.
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