Report: Sun Capital eyes buy of 250-unit Real Mex

Nation's Restaurant News, August 21, 2006

Cypress, Calif. -- Real Mex Restaurants Inc., the Mexican casual-dining segment's largest operator, is being eyed as a potential acquisition target by Sun Capital Partners Inc., a private-equity firm with holdings in Bruegger's Enterprises, Garden Fresh and Souper Salad, according to a Dow Jones report.

Private-equity investment firm Bruckman, Rosser, Sherrill & Co. has since July 1998 held a majority stake in Cypress-based Real Mex, operator or franchisor of nearly 250 Chevys Fresh Mex, El Torito and Acapulco restaurants. In January, Real Mex hired investment bank Piper Jaffray & Co. to evaluate strategic alternatives.

Dow Jones quoted "people familiar with the matter" as indicating that a deal could be as large as $400 million, based on Real Mex's $60 million in annual earnings before interest, taxes, depreciation and amortization.

None of the companies returned calls seeking comment.

For fiscal 2005, Real Mex reported net income of $13.4 million on revenues of $534.3 million, versus earnings of $13.6 million on revenues of $326.8 million a year earlier. Same-store sales increased 2.9 percent for fiscal 2005, but fell 0.6 percent for the three months ended June 25.

Bruckman, Rosser, Sherrill also holds stakes in Au Bun Pain, California Pizza Kitchen and Bravo Development Inc.