Bravo Brio Restaurant Group, Inc. (NASDAQ:BBRG) (“BBRG” or the “Company”), owner and operator of the BRAVO! Cucina Italiana and BRIO Tuscan Grille restaurant concepts, GP Investments, Ltd. (“GP”), a leading private equity and alternative investment firm, and its controlled company Spice Private Equity Ltd. (“Spice”), a Swiss investment company focused on private equity investments, announced a merger agreement under which an affiliate of Spice will acquire the Company for a total enterprise value of approximately $100 million. The transaction proceeds will be funded by Spice, along with certain third-party financing sources.
Under the terms of the merger agreement, BBRG’s shareholders will receive $4.05 per share in cash. The purchase price represents a premium of approximately 37% over the volume weighted average price of the Company’s shares for the 90-day period immediately preceding the date of the agreement. BBRG will report annual sales in excess of $400 million for the year ended December 31, 2017 and owns and operates 110 locations in 32 states across the country.
The merger agreement has been unanimously approved by BBRG’s Board of Directors. The transaction is subject to shareholder approval and other customary closing conditions and is expected to be completed by the end of the second quarter of 2018.
Upon closing of the transaction, BBRG will continue to be operated as an independent company and remain based in Columbus, Ohio.
Dechert LLP served as legal adviser and Piper Jaffray & Co. served as financial adviser to BBRG. Paul, Weiss, Rifkind, Wharton & Garrison LLP served as legal adviser to GP. GLG conducted due diligence on behalf of GP.
Interview with Xavier Le Faucheur, Head of Financial Services Strategic Projects at Gerson Lehrman Group (GLG)
Please tell me about your involvement in the deal?
GLG Strategic Projects, the strategic advisory group of GLG, was retained by GP Investments to conduct commercial due diligence (CDD) on the target. The diligence involved profiling core consumers of Italian casual dining restaurants (segmenting by age and frequency of visit), understanding dining behaviours and preferences, and evaluating perceptions of competitor brands.
The GLG Strategic Projects model is highly differentiated. To support this diligence, we deployed a specialised team comprising former top-tier consultants with extensive consumer product and restaurant sector experience, drawn from GLG’s market-leading network of experts and practitioners. The team conducted comprehensive primary research on consumer preferences.
Why is this a good deal for all involved?
GP Investments has a solid track record of adding value to its portfolio companies and brings world-class restaurant sector expertise to drive BBRG’s growth. GLG Strategic Projects was proud to support this diligence through its unique business model.
What challenges arose? How did you navigate them?
The broad and diverse geographic footprint of BBRG restaurants made it challenging to construct a representative consumer sample. The GLG Strategic Projects team ensured that survey respondents lived within a specific radius of each restaurant location, ensuring an appropriate data cross-section.
A second challenge was to address the natural skew of online surveys towards younger, female respondents. The research instrument proactively corrected for sample bias, ultimately concluding that the original skew did not materially impact findings.