Acquisition expected to be EPS accretive in fiscal year 2016 and strengthen long-term free cash flow generation
Brinker International, Inc. (NYSE: EAT) today announced it has acquired Pepper Dining Holding Corp., a franchisee of 103 Chili’s Grill & Bar restaurants primarily located in the Northeast and Southeast. The purchase price of $106.5 million was funded with availability under Brinker’s existing credit facility and the acquisition is expected to be EPS accretive in fiscal year 2016.
“This acquisition represents a compelling opportunity to create value for our shareholders and generate additional earnings and cash flow growth,” said Wyman Roberts, CEO and President of Brinker International and President of Chili’s Grill & Bar. “We plan to leverage our strong Chili’s operations infrastructure, roll out the brand’s new loyalty program to all restaurants and complete reimaging of the portfolio. More broadly, Brinker remains committed to our other franchise partners and looks forward to continuing to support their growth and expansion.”
This transaction fits within Brinker’s capital allocation strategy of investing in the business, managing debt within investment grade metrics and returning cash to shareholders. Any capital needs of the acquired restaurants will be funded with cash generated from the restaurants with no expected impact to share repurchase capacity.
The company will provide more details about the acquisition on its upcoming fourth quarter earnings call in August, including transition costs and earnings accretion, which remains subject to completion of normal asset valuation process.
Brinker International, Inc. is one of the world’s leading casual dining restaurant companies. Founded in 1975 and based in Dallas, Texas, as of March 25, 2015, Brinker owned, operated, or franchised 1,629 restaurants under the names Chili’s Grill & Bar (1,580 restaurants) and Maggiano’s Little Italy (49 restaurants).