Dive Brief:
- NPC International and Flynn Restaurant Group entered into an asset purchase agreement on Thursday in which NPC’s Wendy’s restaurants in Salt Lake City, Central Maryland, North Baltimore and South Baltimore — about half of NPC's 393 Wendy's units — will be sold to Flynn, according to an SEC filing. Flynn will also acquire all of NPC’s roughly 925 Pizza Hut units and NPC’s shared service assets, according to a press release. This sale totals about $553 million, according to a court filing.
- The other half of NPC's Wendy's units in Kansas City, North and South Greensboro and Raleigh, North Carolina and Pennsylvania will be sold for just over $248 million to several existing Wendy’s franchisees that were part of Wendy’s consortium bid. Both transactions total $801 million.
- This agreement ends objections Wendy’s had over NPC’s $816 million proposed deal with Flynn. The companies went into mediation over sale proceedings in December.
Dive Insight:
Wendy’s criticism of Flynn buying nearly 400 units stemmed in part from Flynn's ownership of Panera and Arby’s locations, which Wendy’s views as competitors. The company typically doesn’t allow franchisees to sell similar products within a three-mile radius, so the new agreement may have eased these concerns since Flynn is only acquiring locations in four distinct markets.
The two separate transactions also satisfy Wendy’s concerns over having one franchisee holding too many units. Wendy's typically caps operators at 400 units. By allowing for the sale of half the units, it gives Flynn the opportunity to expand its Wendy's footprint. While Wendy's won't own any of the other half of the units, the remainder will go to franchisees that already know how the company operates.
As part of both deals, the companies also agreed to offer positions of employment to all of NPC's restaurant field operations employees and substantially all other non-field NPC employees, according to the press release.
"Flynn Restaurant Group has built our business over the last twenty plus years by focusing on managing superior operations with great teams of people at premier restaurant concepts," Greg Flynn, founder, chairman and CEO of Flynn Restaurant Group, said in a statement. "The Pizza Hut and Wendy's restaurants we have agreed to acquire from NPC align perfectly with this strategy, and we’re confident that our new team members will fit right in at Flynn Restaurant Group."
Both transactions are expected to be completed by the second quarter of 2021, subject to approval. A hearing before bankruptcy court to consider the approval of the sale transactions is scheduled for Jan. 15.
