UPDATE: Dec. 3, 2021: Tilman Fertitta's company, Fertitta Entertainment, moved to end its merger deal with Fast Acquisition Corp. on Wednesday, the deadline for closing the deal, according to an 8-K filed by Fast Acquisition. The merger would have taken Fertitta Entertainment public, and included dozens of businesses owned by Tilman Fertitta's company.
Fast Acquisition claimed it would not accept the end of the merger as legitimate, stating Fertitta Entertainment was the cause of delays in the deal. Fertitta Entertainment, according to Fast Acquisition's response, delivered financial statements needed for the deal months later than had been initially agreed upon.
UPDATE: July 1, 2021: Fertitta Entertainment announced Thursday it has entered into an amendment to its merger with Fast Acquisition Corp. Fertitta Entertainment will contribute Mastro's, the Aquariums, the Pleasure Pier, Vic & Anthony's and several smaller businesses, adding a total of 42 businesses not originally part of the deal for no additional debt, according to a press release. Fertitta Entertainment will also acquire the Catch restaurants, including Catch Steak, 50% of which is already owned indirectly by Tilman Fertitta.
The amendment will also give Fertitta additional equity in the company and will increase his total equity stake to roughly 72% after the transaction closes.
"The addition of Mastro's and the destination entertainment businesses provide tremendous cash flow and growth opportunities to the Company and we are excited that Tilman is contributing the new assets to the Company," Fast CEO Doug Jacob said in the release.
Dive Brief:
- Fertitta Entertainment will merge with Fast Acquisition Corp. in an agreement that will take the restaurant company public once again, more than a decade after sole owner Tilman Fertitta took it private in 2010. Fertitta will remain chairman, president and CEO of the parent company of Landry's and Golden Nugget.
- Once the deal closes, Fertitta Entertainment will be valued at $6.6 billion, and institutional investors will invest $1.2 billion in the company when the merger is complete.
- Landry's was on an acquisition tear prior to the pandemic, buying Del Frisco's Double Eagle Steakhouse and Del Frisco's Grille as well as Houlihan's in 2019. Fertitta began to explore going public in 2019 because of "tremendous M&A deals hitting the market," but the pandemic slowed those plans, he said in an announcement Monday.
Dive Insight:
Fertitta chose to merge with Fast because the deal would take his company public faster than a traditional IPO, and give it access to "the capital markets with more certainty," he said.
The deal is expected to close in Q2 2021, and could position Fertitta's portfolio of full-service restaurants — including Rainforest Café, Bubba Gump Shrimp and McCormick & Schmick's — for growth as restaurants hope growing vaccine distribution will eventually ease dining room restrictions.
Fertitta restaurants reported unit-level sales of $5.7 million and $1 million in EBITDA, according to the announcement.
Restaurant M&A is expected to ramp up in 2021 after 2020's activity was stalled by COVID-19's economic disruption. Experts predict that much of these transactions will be between distressed companies and buyers looking for discounts, and chains that are still financially stable will benefit from a shrinking market.
By the end of 2021, between 30% and 50% of independent, full-service operations in the U.S. could shutter permanently, Michael Schaefer, global lead for food and beverage at Euromonitor, said in a recent interview.
Landry's could benefit from a decline in mom-and-pop units. The market's volatility could also open up opportunities for future acquisitions of beleaguered full-service brands.
Fat Brands, for example, acquired experience-focused, casual dining chain Johnny Rockets for about $25 million last year despite significant declines in the full-service segment. Johnny Rockets also experiences a 3.7% sales dip and 3.8% unit contraction to 175 locations in 2019.
