US-based Brinker International has signed a letter of intent to purchase 116 Chili’s Grill & Bar casual restaurants.
Located primarily in the Midwest, the restaurants will be acquired from its franchisee ERJ Dining for an undisclosed amount and generate around $300m in annual revenues.
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Brinker chief financial officer and executive vice-president Joe Taylor said: “This acquisition is a compelling opportunity to further invest in our brand, broaden our scale and create growth in earnings and cash flow.
“We appreciate the relationship we developed with ERJ over the years and view these well-established restaurants as a solid foundation for further growth in these markets.”
The transaction is subject to completion of due diligence and normal closing conditions and is expected to complete in the first quarter of the fiscal year 2020 (FY20).
Brinker will fund the purchase price of the transaction from its existing credit facility.
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By GlobalDataThe company expects the deal to be EPS accretive and generate incremental free cash flow in FY20.
Dallas-headquartered Brinker International owned and operated or franchised 1,676 restaurants, including 1,623 Chili’s Grill & Bar locations, and 53 Maggiano’s Little Italy outlets as of 27 March 2019.
Last August, Brinker signed a definitive agreement with Four Corners Property Trust (FCPT) to sell 48 Chili’s Grill & Bar restaurants for up to $155.7m.
