Brinker International, Inc. (EAT) is a leading casual dining restaurant company founded in 1975. The company, based in Dallas, Texas, owns or franchises more than 1,800 restaurants in 24 countries and employs over 120,000. Brinker restaurant brands include Chili’s Grill & Bar, Romano’s Macaroni Grill®, On The Border Mexican Grill & Cantino® and Maggiano’s Little Italy.
Brinker announced last week it entered into a purchase agreement with Mac Acquisition LLC, an affiliate of Golden Gate Capital, for the sale of a majority interest in Romano’s Macaroni Grill. Golden Gate is a San Francisco-based equity investment firm with over $9B of assets under management dedicated to investing in change-intensive opportunities. Per terms of the agreement, Brinker will receive $131.5M, in case of which $6M will be contributed to Mac Acquisition LLC.
As a result of the transaction, Brinker’s cash from operations will increase due to the cash tax benefit related to the sale, producing a free cash-flow yield for the company ranging from nine to 10 percent for fiscal 2009. As part of the sale transaction, Brinker has entered into an agreement with the new entity to provide corporate support services for a full year, with a one-year extension option and representation on the board of directors of the new entity. The transaction is expected to close by the end of the calendar year upon completion of customary closing procedures.
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