Denny's to Go Private in $620 Million Buyout
Last fall, Denny's announced plans to close 150 underperforming locations. By the end of Q2, the chain operated 1,558 restaurants worldwide. On Monday, Denny's revealed it is being acquired by a group of investors, resulting in the breakfast brand going private.
The deal, unanimously approved by Denny’s board, values the company at $620 million including debt. The buyers are TriArtisan Capital Advisors, Treville Capital, and Yadav Enterprises, a major franchisee of Denny’s.
Terms of the Acquisition
Denny’s shareholders will receive cash payments of $6.25 per common share, totaling $322 million. This price represents a 52% premium over the closing stock price on Monday. Following the announcement, Denny's shares surged 47% in after-hours trading.
Company Background and Challenges
Founded in 1953 in Lakewood, California as Danny’s Donuts, the chain was renamed Denny’s Coffee Shops in 1959 to avoid confusion with another brand. It joined the New York Stock Exchange in 1969.
Like many casual dining chains, Denny’s sales dropped significantly during the COVID-19 pandemic. As conditions improved, the company faced shifts in customer habits, particularly an increased preference for delivery. It also confronts competition from newer chains such as First Watch, which focus on healthier breakfast choices.
“Last fall, Denny’s said it planned to close 150 of its lowest-performing locations.”
These ongoing challenges have shaped the company’s strategic decisions in recent years.
Author's Summary
Denny's is transitioning to private ownership through a $620 million deal, aiming to navigate post-pandemic shifts and rising competition in casual breakfast dining.