J. Alexander's Holdings sold to SPB Hospitality for $220M

Dive Brief:

J. Alexander's Holdings, parent company of J. Alexander's Restaurant, Redlands Grill and other restaurants, has sold to SPB Hospitality for $220 million in an all-cash transaction.
The transaction is expected to close in Q4 2021 subject to approval by J. Alexander's Holdings shareholders and customary closing conditions. CEO Mark Parkey said the deal "will provide liquidity at a significant premium" for shareholders.
Restaurant mergers and acquisitions have been heating up as dining restrictions ease, diner demand surges and investor confidence in the segment returns. Just this week, Taco Cabana sold to Jack in the Box franchisee YTC Enterprises for $85 million, and Au Bon Pain was acquired by Yum Brands operator Ampex Brands. Last week, BBQ Holdings bought Village Inn and Bakers Square for $13.5 million.

Dive Insight:

J. Alexander's Holdings' board of directors announced in the summer of 2019 it was considering the merger or sale of the company. Lonnie J. Stout II, executive chairman for the company, noted then that "recent transactions for companies in the the upscale casual dining segment make this potential path more attractive." At the time, there had been a steady stream of acquisitions in the casual dining space.

Flash forward nearly two years and the segment has been hit the hardest by the COVID-19 pandemic. Investor interest in full-service restaurants, however, is bouncing back as sales and traffic improve for the category. SPB has extensive experience with casual dining concepts, boasting hundreds of restaurants and breweries in 38 states and Washington, D.C.

Last year SPB bought CraftWorks, which operates restaurants and breweries including Logan's Roadhouse, Old Chicago, Rock Bottom and Gordon Biersch Brewery Restaurant. It inherited 261 company-owned locations, which all closed during the pandemic after CraftWorks lost debtor-in-possession financing. It appears some of these restaurants are still closed, but under SPB, at least 194 reopened, according to FSR magazine.

J. Alexander's Holdings has had suitors prior to SPB's acquisition. In April 2019, activist investor Ancora Advisors submitted a takeover bid for the company, but the restaurant group's board of directors rejected the proposal because the price was too low and they didn't think it would increase shareholder value.

Casual rivals are also heating up restaurant mergers and acquisitions this year. Fertitta Entertainment, for example, added 42 businesses including Mastro's to its merger agreement with Fast Acquisition Corp. for no additional debt.