THL unwraps $928m fast food deal

Thomas H Lee Partners plans to boost its fast food holdings with the $928 million take-private of CKE Restaurants. The transaction price includes the assumption of $309 million in net debt.

Bank of America Merrill Lynch and Barclays Capital have provided an undisclosed amount of acquisition financing for the deal, according to a statement.

New York Stock Exchange-listed CKE – which controls more than 3,000 Carl's Jr. and Hardee's restaurant locations in 42 states and 14 countries – saw its stock rise 28 percent Friday upon news of the deal, closing at $11.37 per share.

Carl's Jr burger: on THL's menu

THL will pay CKE shareholders $11.05 in cash per share, a premium of 24 percent to the company's closing price on 25 February, the day prior to the deal's announcement. Pending shareholder and regulatory approval, the transaction is expected to close in the second quarter of 2010. CKE will actively seek superior offers during a 40-day “go-shop” period ending 6 April.

The deal will add a second, high profile fast food chain to THL's portfolio. The Boston-headquartered firm already owns Dunkin' Brands, parent of Dunkin' Donuts, along with Bain Capital and the Carlyle Group.

It is not the first time name-brand burger franchises have become a private equity target. TPG, Bain and Goldman Sachs have notably received a steady revenue stream since purchasing Burger King's US operations for $1.5 billion in 2003. The trio have have slowly sold down their  stake after the company's public listing in 2006, which raised $425 million.