Denny's to Go Private in $620 Million Deal
Last fall, Denny's announced plans to close 150 of its lowest-performing restaurants. By the end of the second quarter, the chain operated 1,558 locations worldwide.
On Monday, Denny's revealed it is being acquired by a group of investors in a deal that will take the breakfast chain private. The deal, unanimously approved by Denny's board, values the company at $620 million including debt.
Buyers and Terms of the Deal
- Acquirers include private equity firm TriArtisan Capital Advisors, investment company Treville Capital, and Yadav Enterprises, one of Denny's largest franchisees.
- Shareholders will receive $6.25 per share in cash for each share of Denny's common stock, totaling $322 million.
- This represents a 52% premium over Denny's closing stock price on Monday.
- Following the announcement, Denny's shares rose 47% in after-hours trading.
Company Background and Recent Challenges
Denny's originated in 1953 in Lakewood, California, initially named Danny’s Donuts. The name changed to Denny’s Coffee Shops in 1959 to avoid confusion with another chain. The company went public on the New York Stock Exchange in 1969.
Like many casual dining chains, Denny's sales dropped sharply during the COVID-19 pandemic. As the pandemic eased, the company faced shifting customer habits, such as increased reliance on delivery services.
Denny's has also struggled to compete with newer chains like First Watch, which offer healthier breakfast choices.
"Last fall, Denny’s said it planned to close 150 of its lowest-performing locations."
This strategic move was part of the effort to streamline operations amid ongoing market challenges.
Summary
Denny's is transitioning to private ownership through a $620 million acquisition amid post-pandemic shifts in dining trends and increased competition from newer breakfast chains.
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