UPDATE: April 6, 2020: The merger between TGIF Holdings and Allegro Merger Corp. was canceled last week due to "extraordinary market conditions and the failure to meet necessary closing conditions," according to a regulatory filing. As a result, privately held TGI Fridays will no longer be going public.
Dive Brief:
- TGI Fridays and Allegro Merger Corp., a special purpose acquisition firm, have signed a business combination agreement that will take the casual restaurant chain public if the deal closes, according to a press release.
- At closing, TGI Fridays' shareholders will receive $30 million in a combination of cash and stock, and Allegro will take on around $350 million of debt.
- TriArtisan Capital Advisors LLC, the majority owners of TGI Fridays, plan to exchange a majority of its ownership in the restaurant for shares of Allegro. MFP Partners expects to trade its entire Fridays ownership for shares of Allegro. Fridays shareholders will gain an additional $2 million in Allegro shares if the restaurant meets undisclosed post-close performance goals.
Dive Insight:
TGI Fridays' dashed plan to go public is the latest blow to casual dining amid the novel coronavirus pandemic.
If this deal with the blank-check company had closed — using bank financing and funds from IPOs to purchase privately held brands and take them public — the proceeds would have helped TGI Fridays trim its debt, which would have provided welcome relief for the brand.
The chain has been privately held since it merged with Carlson Restaurant in 1975 when the chain had only 12 restaurants. In 2014, Carlson sold the company to TriArtisan Sentinel Partners for more than $800 million. For the fiscal year ended Sept. 30, Fridays' systemwide sales exceeded $2 billion on average unit volumes of $2.7 million.
Now that the merger with Allegro Merger Corp. is off the table and the full-service dining category is being pummeled by the coronavirus crisis, the chain's future is uncertain. Major U.S. rivals are also struggling. The Cheesecake Factory recently informed landlords that it could not pay its April rent, and Moody's investors have downgraded the ratings of full-service restaurants including P.F. Chang's, Red Lobster and California Pizza Kitchen.
