Franchise Group has completed an agreement to acquire American Freight in an all cash transaction valued at approximately $450 million from an affiliate of The Jordan Company.
Franchise Group has completed an agreement to acquire American Freight Group, a discount retail chain offering brand-name furniture, mattresses and home accessories, in an all cash transaction valued at approximately $450 million from an affiliate of The Jordan Company and other stockholders of American Freight.
Upon the closing of the transaction, Franchise Group’s systemwide revenue, which is defined as total sales for both franchise and company units, will exceed $2.4 billion.
The transaction is expected to be completed in the first quarter of 2020, subject to the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as well as other customary closing conditions.
In connection with the signing of the transaction, Franchise Group intends to sign a new $700 million credit facility with affiliates of Kayne Anderson Capital Advisors and Great American Capital Partners, a subsidiary of B. Riley Financial, that will provide 100% of the financing needed for the acquisition, including the refinancing of the company’s term loans for its Buddy’s Home Furnishings and Sears Outlet businesses. The financing will close simultaneously with the transaction.
B. Riley FBR and Kayne acted as advisors.
“We are proud to welcome American Freight, its management team and employees to the Franchise Group. American Freight is a deep value, category-defining furniture retail model with a compelling, proven track record of growth and stability throughout economic cycles,” said Brian Kahn, president & CEO of Franchise Group.
“American Freight’s unmatched cash-on-cash unit economics make it an attractive opportunity for franchisees to benefit from a clear whitespace growth opportunity. We expect that combining American Freight with our similarly large-format Sears Outlet business and our small-format Buddy’s Home Furnishings business will generate significant economic synergies over time that will be realized from leveraging corporate overhead, vendor and franchisee partnerships, operating methods, and a common customer base.”
Franchise Group is an operator of franchised and franchisable businesses and uses its operating expertise to drive cost efficiencies and grow its brands.
Founded in 1982, The Jordan Company is a middle-market private equity firm that has managed funds with original capital commitments in excess of $11 billion and a 37-year track record of investing in and contributing to the growth of many businesses across a wide range of industries.