Sun Capital offers to pay $337.2m to scoop up Friendly's

Nation's Restaurant News, June 25, 2007 by Sarah E. Lockyer

WILBRAHAM, MASS. -- The board of directors of Friendly Ice Cream Corp. agreed June 17 to an acquisition of the company by an affiliate of Sun Capital Partners Inc. for $15.50 per share in cash, or about $337.2 million.

Friendly said the offer represents an 8.2-percent premium over the closing price of its stock on June 15, and a 30.9-percent premium over the closing price on March 6, the day before Friendly said it would explore strategic alternatives, including a sale of the 72-year-old brand.

Friendly has been battling with activist investor and Western Sizzlin chairman and chief executive Sardar Biglari. Biglari, who holds a 15-percent stake in Friendly through Western Sizzlin, a family steakhouse chain, and The Lion Fund LP, his investment holding, has been pushing for change, including increased refranchising and a more aggressive effort to rejuvenate the Friendly's brand.

Friendly and its franchisees operate 515 family-dining restaurants. In addition, Friendly's ice cream is sold in more than 4,000 retail locations. George Condos, chief executive of the Wilbraham-based company, said the deal with Sun Capital would reward shareholders "more quickly and with greater certainty than other alternatives we examined."

Gary Talarico, Sun Capital's managing director, called Friendly's "an iconic brand name" and said his private-equity firm would seek to "reinvigorate and expand the company within and beyond" core markets. Sun Capital already has arranged financing for the deal.

Friendly said a shareholder group including company chairman Donald N. Smith, The Lion Fund LP, Biglari Capital Corp. and S. Prestley Blake, a Friendly's co-founder, collectively own more than half of Friendly shares and have agreed to the deal, which requires an affirmative vote of two-thirds of all shareholders. The transaction is expected to close during the third quarter.

Boca Raton, Fla.-based Sun Capital holds controlling interests or has investment stakes in Bruegger's Enterprises Inc., Fazoli's Restaurants, Garden Fresh Restaurant Corp., Real Mex Restaurants Inc. and Restaurants Unlimited.