The ONE Group Hospitality, Inc. (Nasdaq: STKS) and Kona Grill Acquisition, LLC, its wholly owned subsidiary, today announced KGA has entered into an Asset Purchase Agreement with Kona Grill, Inc. and affiliated entities to purchase substantially all of Kona’s restaurants for approximately $25 million. The final purchase price will be determined at the closing of the transaction based on the completion of due diligence, subject to certain agreed upon adjustments. The Company expects to finance the acquisition with a new financing facility and cash on hand.
Under the terms of the APA, subject to certain conditions, the Company has agreed to purchase the remaining 24 of Kona’s domestic restaurants and assume certain contracts, including two international franchise licenses, for approximately $25 million in cash plus the assumption of working capital liabilities of approximately $11 million. If completed, the Company expects the integration to take approximately 12 months. Once fully integrated, the acquisition is expected to add approximately $100 million in annualized revenue and to be accretive to earnings per diluted share and Adjusted EBITDA.
“Kona Grill is an excellent brand that has maintained a strong position in the remaining 24 restaurants where it operates due to its elevated dining experience, contemporary, freshly prepared food, award-wining sushi, and specialty cocktails. Through this transaction, we believe we can leverage our corporate infrastructure and operating expertise, particularly our bar-business know-how and VIBE dining, to drive improved performance in many of the same ways we have substantially improved comparable store sales and overall profitability at STK,” said Emanuel “Manny” Hilario, President and CEO of The ONE Group.
“The acquisition of Kona Grill also provides us with a complementary concept to STK, potentially creating another long-term growth vehicle once we fully integrate the restaurants into The ONE Group. The remaining 24 domestic restaurants, down from 40 at year-end 2018, reflect a strong base of high performing restaurants in attractive markets. We look forward to maximizing the multiple opportunities that this acquisition will provide to create long-term shareholder value,” concluded Mr. Hilario.
The Kona assets include the worldwide rights to the name “Kona Grill” and other intellectual property, including trademarks, domain names, menu recipes, and customer databases. The acquisition is subject to financing conditions, the approval of the United States Bankruptcy Court for the District of Delaware, and other customary closing conditions.
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