The senior management team of Franchise Group, led by the company’s CEO Brian Kahn along with a consortium of financial partners that includes B. Riley Financial and Irradiant Partners, have agreed to acquire approximately 64% of the company’s stock that the management group does not currently own in a transaction that will take the company private.
Franchise Group owns and operates a number of “franchised and franchisable” businesses that include The Vitamin Shoppe as well as Pet Supplies Plus, Wag N’ Wash, American Freight, Badcock Home Furniture & More, Buddy’s Home Furnishings and Sylvan Learning. In total, Franchise Group currently operates more than 3,000 locations, predominantly in the U.S., that are either company-run or operated by franchisees or dealers.
The transaction is valued at approximately $2.6 billion. Under the proposal, Franchise Group common stockholders other than the management group will receive $30 in cash for each share of common stock they hold, representing a premium of 31.9% over the company’s closing common stock price on March 17, 2023, which was the last trading day before the company announced the receipt of the unsolicited proposal to be acquired.
The deal is expected to close in the second half of 2023, subject to customary closing conditions and stockholder approval. However, the deal also includes a 30-day “go shop” period during which the company can solicit alternative proposals from interested parties. If the current deal goes through, Franchise Group will become a private company and will no longer be traded on the NASDAQ. Franchise Group’s management team, including Kahn, is expected to continue to lead the company.
“We are excited to have this opportunity to continue our business strategy of partnering with high quality franchisees, operators and financial institutions, while also delivering certain value to our public stockholders despite a challenging business environment,” said Kahn in a statement.
Franchise Group was founded and went public on the NASDAQ in 2019 through the merger of Liberty Tax and Buddy’s Home Furnishings. That same year it acquired The Vitamin Shoppe and Sears Outlet, which it eventually merged into the American Freight business when that company was acquired in 2020. In 2022, the company attempted to buy Kohl’s, but that deal fizzled out.