New York firms to ac­quire Char­lotte-based Bo­jan­gles’

The Herald (Rock Hill) - - Business - BY KATHER­INE PER­ALTA kper­alta@char­lot­teob­server.com Kather­ine Per­alta: 704-358-5079, @katieper­alta

A new chap­ter is about to be­gin for Bo­jan­gles’, an iconic brand that started in Char­lotte in 1977.

The chicken-and-bis­cuits chain has agreed to be ac­quired in an all-cash deal by two New York firms, Du­ra­tional Cap­i­tal Man­age­ment LP and The Jor­dan Co. LP, ac­cord­ing to a state­ment Tues­day.

Bo­jan­gles’ share­hold­ers will re­ceive $16.10 per share, a 39 per­cent premium to the clos­ing share price on Feb. 12, a day be­fore spec­u­la­tion arose that Bo­jan­gles’ might it­self.

The deal, sub­ject to share­holder ap­proval, is ex­pected to close in the first quar­ter of fis­cal 2019. Bo­jan­gles’ said in the state­ment that when the trans­ac­tion closes, it will con­tinue to be op­er­ated as an in­de­pen­dent, pri­vately held com­pany and will re­main based in Char­lotte.

In the years since it went pub­lic in 2015, Bo­jan­gles’ has been be­set with a num­ber of chal­lenges, prompt­ing com­pany lead­ers to work to im­prove the chain’s fi­nan­cial health – and prompt­ing ex­perts to spec­u­late that Bo­jan­gles’ could be a takeover tar­get.

Bo­jan­gles’ ex­panded into new mar­kets out­side the Caroli­nas, but many of those new restau­rants haven’t fared as well as the ones in its core mar­kets. In its last earn­ings re­port, in which the com­pany said its quar­terly profit plum­meted more than 70 per­cent, Bo­jan­gles’ said it closed 10 com­pany-op­er­ated stores in Alabama, Ken­tucky, Ten­nessee and Vir­ginia.

Clifton Rut­ledge, a former ex­ec­u­tive at Tex­as­based Whataburger who steered Bo­jan­gles’ through its ini­tial pub­lic of­fer­ing, abruptly stepped down in March af­ter about four years as Bo­jan­gles’ CEO. Randy Ki­bler, who ran the com­pany in 2007-2011, was named in­terim CEO.

C.L. King an­a­lyst Michael Gallo said he wouldn’t be sur­prised if Bo­jan­gles’ new own­ers close more restau­rants and re-fran­chise oth­ers. Re­fran­chis­ing refers to brands flip­ping com­pany-owned stores to fran­chisees, and it’s done to reap a big­ger profit.

Gallo also said he ex­pects the new own­ers to slow the chain’s ex­pan­sion for now so they can “get their ducks in a row and get their (restau­rant) pro­to­type fig­ured out,” Gallo said.

“If this com­pany is go­ing to ex­pand out of the core mar­ket, some changes will have to be made to where it can travel well.”

Gallo doesn’t an­tic­i­pate any sweep­ing changes to the Bo­jan­gles’ brand, how­ever.

BO­JAN­GLES’ GETS NEW OWNERSOVER THE YEARS

Four years af­ter open­ing the first restau­rant at West Boule­vard and South Tryon Street, co-founder Jack Fulk sold the chain to the New York food ser­vices com­pany Horn & Har­dart for $12 mil­lion.

In an Oc­to­ber 1982 Ob­server story, Fulk said he sold the com­pany in order to “have the fi­nan­cial back­ing nec­es­sary for rapid growth.”

Un­der Horn & Har­dart, the chain did ex­pand rapidly – to 328 restau­rants at its peak. Bo­jan­gles’ added stores all over the U.S., ac­cord­ing to the Ob­server story.

When it opened a restau­rant near Times Square in Man­hat­tan in 1982, the store was so suc­cess­ful at first that ad­di­tional fry­ing and mar­i­nat­ing equip­ment had to be in­stalled.

Fran­chisees at the time said, how­ever, that the chain cut cor­ners in qual­ity con­trol and mar­ket­ing, lead­ing to fi­nan­cial losses, ac­cord­ing to an Au­gust 1990 Ob­server story.

Horn & Har­dart trimmed the chain’s foot­print to 152 stores by 1990, when it sold Bo­jan­gles’ to two Cal­i­for­nia ven­ture cap­i­tal firms, Si­enna Hold­ings of Los An­ge­les and In­ter­west Part­ners of San Fran­cisco, for $24 mil­lion.

Af­ter a few years, a group led by restau­rant ex­ec­u­tive Glenn Gulledge and former Char­lotte steel ex­ec­u­tive James Miller bought Bo­jan­gles’ for $85 mil­lion in 1998.

A “re­bound” brought the num­ber of lo­ca­tions to 386 in 11 states, Hon­duras and Mex­ico by the early 2000s, ac­cord­ing to a Septem­ber 2007 Ob­server story.

Bo­jan­gles’ was bought in 2007 by a group led by Fal­fur­rias Cap­i­tal Part­ners, the pri­vate eq­uity firm co-founded by former Bank of Amer­ica CEO Hugh McColl.

ALEX KORMANN ako­r­mann@char­lot­teob­server.com

Char­lotte-based Bo­jan­gles’ said Tues­day it has agreed to be bought in an all-cash deal by Du­ra­tional Cap­i­tal Man­age­ment LP and The Jor­dan Co. LP.

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