YUM! Brands Inc. plans to buy Habit Restaurants Inc., which operates and franchises restaurants under The Habit Burger Grill brand name, for $375 million.
Yum! Brands will acquire all the issued and outstanding common shares of Habit Restaurants for $14 per share in cash, the companies announced Jan. 6.
Habit Restaurants' shares closed at $10.51 on Jan. 3. The company's board unanimously approved the transaction.
The deal is expected to close by the end of the second quarter.
Habit Burger Grill is a fast-casual concept founded in California in 1969 that offers made-to-order items cooked over an open flame. The company has nearly 300 corporate-owned and franchised locations across the U.S. and China.
"As a fast-casual concept with strong unit economics, The Habit Burger Grill is a fantastic addition to the Yum! family and has significant untapped growth potential in the U.S. and internationally," said Yum! Brands CEO David Gibbs in the release.
Even though Habit Restaurants is small compared with other businesses in the Yum! Brands' portfolio, which includes KFC, Taco Bell and Pizza Hut, the burger chain's focus on quality and room for growth made it attractive, said Will Slabaugh, a Stephens analyst, in a Jan. 6 research note.
Yum! Brands plans to fund the deal using cash on hand and available borrowing capacity under its credit facilities.
When the deal closes, Habit Burger Grill will remain based in Irvine, Calif., and the company will retain Habit President and CEO Russell Bendel and CFO Ira Fils. Bendel will report directly to Gibbs of Yum! Brands.
The transaction is subject to customary closing conditions.
BofA Securities Inc. acted as financial adviser, and Mayer Brown LLP acted as legal adviser to Yum! Brands. Piper Sandler Cos. acted as financial adviser, and Ropes & Gray LLP acted as legal adviser to The Habit Burger Grill.