Yum Brands Buys Burger Chain

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By Jonathan Maze

OK, so we were half right.

When we gave our argument for five acquisitions we’d like to see this year we listed a Yum Brands deal for a burger chain first, figuring that it was ready to make a deal and that a burger chain made the most sense.

We just didn’t think it would come this soon—or that it would be The Habit Burger Grill.

Yet Habit is a relatively easy acquisition for Yum, which owns KFC, Pizza Hut and Taco Bell and can get its fourth concept for $375 million, or $14 per share—certainly far easier than our idea, which would have cost Yum at least 22 times that price. Yum is proposing a multiple of just over 9 times earnings before interest, taxes, depreciation, and amortization, or EBITDA, to take on Habit.

The fast-casual chain was available at that price because Habit has struggled with falling traffic and declining EBITDA margins as it focused primarily on company-operated unit growth.

Read more for our source: Restaurant Business

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