By Abigail Summerville
NEW YORK, Nov 20 (Reuters) - The private equity owner of Freddy's Frozen Custard & Steakburgers is exploring a sale of the fast-casual restaurant chain that could value it at more than $1 billion, including debt, according to people familiar with the matter.
Thompson Street Capital Partners, which acquired Freddy's from its founders in 2021, is working with investment bank William Blair to launch a sale process for Freddy's that could attract interest from other investment firms, sources said, requesting anonymity as the matter is confidential.
Based on comparable transactions in the sector, Freddy's could be valued at more than 20 times its annual core earnings, the sources said.
Thompson Street declined to comment. Freddy's and William Blair did not immediately respond to requests for comment.
Franchise-operated restaurant chains have recently drawn interest from private equity firms that are attracted to businesses in the sector, which typically are less expensive to operate and generate steady royalty fees.
On Tuesday, Blackstone BX.N struck a deal to buy sandwich chain Jersey Mike's for about $8 billion, including debt. Sycamore Partners acquired Playa Bowls in September.
Wichita, Kansas-based Freddy's was launched in 2002 by Bill and Randy Simon, and their business partner Scott Redler, and named after the father of the Simon brothers.
It currently operates over 500 locations across North America and competes primarily against hamburger chains. A majority of its locations are operated by franchise partners.
St. Louis-based Thompson Street Capital invests in mid-sized, founder-led businesses and manages around $4.5 billion in assets.
(Reporting by Abigail Summerville; Editing by Lisa Shumaker)
((abigail.summerville@thomsonreuters.com;))
Comments