NPC has entered into an Asset Purchase Agreement (APA) with a subsidiary of The Wendy’s Company (Wendy’s) to acquire 22 Wendy’s restaurants for $9.3 million, plus amounts for working capital and initial franchise fees. NPC also agreed to acquire two additional restaurants currently under development by Wendy’s in exchange for reimbursement of development costs and payment of initial franchise fees, thereby increasing the number of restaurants to be acquired to 24. As part of the agreement, NPC plans to reimage certain acquired restaurants in Wendy’s new Image Activation format.
The units being sold by Wendy’s include 14 fee-owned locations, which will be leased from Wendy’s. This acquisition will be funded entirely with available cash reserves. The restaurants will be owned and operated by NPC’s wholly owned subsidiary, NPC Quality Burgers, Inc.
The units to be acquired pursuant to the APA are located in the Kansas City metropolitan area. According to information provided to NPC, 22 of the units to be acquired by NPC generated $32.7 million in net product sales during the 52 weeks ended December 30, 2012. NPC expects the closing to occur in July 2013, subject to customary closing conditions.
Jim Schwartz, Chairman and CEO of NPC International, Inc. said, “We are excited about the future prospects of Wendy’s and the opportunity to partner with another great iconic American brand. This acquisition is an entry point into the Wendy’s system from which we look forward to growing substantially through acquisition and development.
We firmly believe this opportunity plays well to our core competencies and positions NPC with significant growth runway when combined with our Pizza Hut interests. We believe we can leverage our abundant liquidity and penchant for strong cash flow generation to grow and invest in both of these brands aggressively.”
Wendy’s President and Chief Executive Officer Emil Brolick said the transaction promises to be mutually beneficial for NPC and Wendy’s. “As part of our restaurant ownership optimization initiative, we are focused on recruiting successful, well-capitalized franchisees with strong operating credentials that are committed to our Image Activation reimaging program,” Brolick said. “We look forward to working with the NPC team to grow our brand, sales and profits together.”