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Restaurant Brands (QSR) to Acquire Firehouse Subs for $1B

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Restaurant Brands International Inc. (QSR - Free Report) recently reached an agreement to acquire the sub sandwich chain — Firehouse Subs — in a deal valued at $1 billion. Following the news, the company’s shares gained 2.1% on Nov 15. However, the stock has declined 12.7% in the past six months, against the industry’s growth of 3%.

Firehouse Subs will be a new addition to Restaurant Brands’ family of iconic quick service restaurant brands — Tim Hortons, Burger King and Popeyes. The company is quite confident about the acquisition’s long-term prospects.

José Cil, CEO of Restaurant Brands said, “Firehouse Subs is a special brand with a talented team, impressive culture and community focus that resonates with guests and closely aligns with our core values at RBI. We see tremendous potential to accelerate U.S. and international growth at Firehouse Subs with RBI's development expertise, global franchisee network and digital capabilities.”

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Firehouse Subs, which was founded in 1994 by brothers and former firefighters Chris and Robin Sorensen, has nearly 1,200 locations across the United States. Firehouse Subs is expected to generate $1.1 billion in systemwide sales for 2021. In the first 10 months of 2021, the company’s same store sales increased 20% in comparison to the same period 2019. The buyout is anticipated to be earnings accretive immediately.

Meanwhile, the brand has a robust family of franchises, which owns and operates 97% of the brand's restaurants across 46 U.S. States, Canada and Puerto Rico. Firehouse Subs is likely to generate approximately $50 million of 2021 adjusted EBITDA.

Firehouse Subs has a robust digital foundation and a mobile app. The brand’s loyalty program has nearly 3.5 million subscribers. This acquisition will drive Firehouse Subs' competences by leveraging RBI's in-house tech-stack, engineers and continued investments in digital and technology.

Restaurant Brands has a Zacks Rank #4 (Sell).

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