On Tuesday, shares of Buffalo Wild Wings are soaring, up around 24% to $145.50 per share in midday trading after Roark Capital Group, the private equity firm that owns Arby’s, Carl’s Jr., and other fast-food brands, made a significant takeover bid for the chicken wing chain.
Roark is offering a deal worth $2.3 billion, or over $150 per share, which represents a premium of at least 28% to the stock’s close on Monday.
Analysts at Wedbush raised their price target to $130 from $115, saying in a client note that the offer was realistic, and Buffalo Wild Wings’ management could view the deal favorably because the stock’s price right now has limited opportunity for same-store sales growth and margin expansion.
Roark is also no stranger to the restaurant industry, and in addition to Arby’s and Carl’s Jr., has invested in chains like Cinnabon, Carvel, and Auntie Anne’s. The firm made a play for fellow chicken chain Popeyes, but lost out to Restaurant Brands International (QSR - Free Report) , which ended up buying the company for roughly $1.8 billion in February.
The news follows other deals involving private equity groups acquiring restaurants. NRD Capital just scooped up Ruby Tuesday for roughly $335 million back in October, and JAB Holdings has been building up a solid food portfolio over the last two years, adding Panera Bread and Krispy Kreme Doughnuts.
This deal has been a positive impact on the restaurant sector overall today. Other gainers include Bloomin’ Brands (BLMN - Free Report) , which owns Outback Steakhouse and Carraba’s Italian Grill, BJ’s Restaurants (BJRI - Free Report) , Red Robin Gourmet Burgers (RRGB - Free Report) , Chuy’s Holdings (CHUY - Free Report) , Bojangles (BOJA - Free Report) , and Cheesecake Factory (CAKE - Free Report) , among others.
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