TGI Fridays to Go Public After $380M Deal

TGI Fridays is known for “authentic American food and legendary drinks”. They currently have over 870 restaurants in more than 55 countries. How will going public affect them?


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TGI Fridays is about to go public. TGIF Holdings, LLC and Allegro Merger Corp. announced Friday in a joint statement they’ve signed a definitive agreement for “a business combination transaction.” The deal would result in TGI Fridays becoming a publicly listed company.


Allegro is a publicly traded special purpose acquisition group.


At closing, TGIF’s holders will receive a combination of cash and stock valued at $30 million. Allegro will assume roughly $350 million of net debt.


The majority owners of TGIF, funds managed by TriArtisan Capital Advisors LLC, expect to exchange a majority of their ownership in the business for shares of Allegro.


Holder MFP Partners, L.P., led by Michael Price, plans to exchange all of its ownership for shares of Allegro as well.


TGIF’s existing holders may receive an additional two million shares of Allegro common stock contingent upon achievement of certain post-closing metrics of the business, the company said. It didn't disclose what those benchmarks were.


The pro forma valuation of the combined business, assuming a $10.16 stock price, represents a relative discount to comparable publicly traded dining concepts. The company said the deal would deliver its balance sheet and provide TGI Fridays with capital to fund future growth.


Currently, 83 percent of its units are franchised and franchising and licensing account for more than 70 percent of total profitability.


TGIF and Allegro’s board of directors unanimous approved the merger agreement and recommended stockholders to do so.


“Allegro’s Board and I believe that Fridays is an unparalleled iconic international brand and we are excited to be able to bring this opportunity to our shareholders,” said Eric Rosenfeld, Allegro’s CEO, in a statement. “Fridays’ highly predictable stream of franchise and licensing revenue is very attractive and we believe that Fridays provides a compelling value to our shareholders,” he added.


Added Rohit Manocha, managing director and co-founder of TriArtisan: “TGI Fridays is a global, iconic brand with a top tier, highly engaged management team. Coupled with the right capital structure, we believe the brand is ideally positioned to take advantage of the rising demands of our guests. TGI Fridays’ bar heritage is unique and creates a point of distinction in this mature segment of casual dining.”


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