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Ruby Tuesday Chain To Be Taken Private

The casual dining chain represents the latest investment in multi-location franchises by private equity firm NRD Capital.

Ruby Tuesday operates 599 locations in the US and 14 foreign countries.

MARYVILLE, TN—Casual dining chain Ruby Tuesday, hit by four consecutive years of declining sales, said Monday it would be taken private by NRD Capital for $335 million, including the assumption of debt. The deal for $2.40 per common share represents a 21% premium on Ruby Tuesday’s closing price this past Fridayand a 37% premium over its closing price on March 13, the day before the company said it would explore strategic alternatives. At its peak in 2004, the chain’s stock traded at about $33 per share.

“The board of directors and our advisors have thoroughly evaluated all options available to the company and are confident that this agreement will provide the most promising opportunity to realize the highest value for our stockholders while providing the best path forward for the Ruby Tuesday brand, its employees, franchisees and loyal customers,” says Stephen Sadove, Ruby Tuesday’s non-executive chairman. “NRD Capital has a distinguished track record of achieving and maintaining profitable growth for restaurant concepts and will be an excellent partner to lead Ruby Tuesday going forward.”

For Atlanta-based NRD, Ruby Tuesday will represent the third multi-location franchise operation it owns outright, although it has invested in several others. The company now has Frisch’s Big Boy and Fuzzy’s Taco Shop in its portfolio; together, the two chains have generated $450 million in annual system revenues from 220 locations in 12 states. NRD has also made investors in Domino’s Pizza, Checkers, Moe’s Southwest Grill and Taco Bell franchise operations.

This past July, the company closed on NRD Partners II LP with total investor limited partner commitments of $104 million secured over the past four months, exceeding the fund’s target of $100 million. NRD will use the fund to make additional investments in franchise operations, primarily in the restaurant space although also focusing on healthcare franchises.

“As a private company, we will be able to take a long-term view on Ruby Tuesday, allowing us to make an investment in people, product and customer experience, without public company constraints,” says NRD founder Aziz Hashim. “This approach will enable us to reward everyone involved in our success, in addition to our investors.”

UBS Investment Bank is serving as financial advisor to Ruby Tuesday and provided a fairness opinion to its board of directors, while Davis Polk is serving as legal advisor. For NRD, Cheng Cohen is serving as legal advisor and Arlington Capital Advisors is serving as financial advisor. The deal is expected to close in the first quarter of 2018.

Currently, Ruby Tuesday operates 599 restaurants in 41 states, 14 foreign countries and Guam. That number includes 58 franchised locations, most of which are overseas. The Wall Street Journal reported Monday that the chain had closed more than 100 locations over the past two years.

Separately, Ruby Tuesday on Monday reported its latest quarterly results, which reflected year-over-year sales declines for the 13 weeks that ended Sept. 5. However, it’s not alone among its publicly traded peers in this regard: the most recent quarterly filing from DineEquity International, which controls the Applebee’s and IHOP brands, also showed lower sales Y-O-Y for the three-month and six-month periods that ended June 30, and Brinker International reported an 8.6% Y-O-Y decline for its Chili’s brand during the quarter that ended June 28.

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