Luby's, Inc. (NYSE: LUB) ("Luby's"), owner of Luby's Cafeterias and Fuddruckers brands, announced that it has entered into a Membership Unit(s) Sale And Purchase Agreement ("Agreement") to purchase all of the Membership Units of Paradise Restaurants Group LLC, and certain of their affiliates (collectively known as, "Cheeseburger in Paradise") through a wholly-owned subsidiary for approximately $11 million in cash plus customary reimbursements for cash-on-hand, inventory, and accounts receivable offset by liabilities assumed at closing. Luby's will fund the purchase from cash and its credit facility. Luby's will operate 23 Cheeseburger in Paradise locations in 14 states. Prior year revenues for the locations to be purchased were over $50 million. Luby's anticipates developing opportunities to expand the brand.
Cheeseburger in Paradise is known for its inviting beach-party atmosphere, its big, juicy burgers, salads, coastal fare and other tasty and unique items. Cheeseburger in Paradise is a full-service island-themed restaurant and bar, developed ten years ago in collaboration with legendary entertainer Jimmy Buffett, based on one of his most popular songs. The restaurants also feature a unique tropical-themed island bar with many televisions and tasty "boat drinks".
Chris Pappas, President and CEO, remarked, "Cheeseburger in Paradise will nicely complement our core family-friendly brands, Luby's Cafeterias and Fuddruckers, with a casual dining restaurant and bar offering. A number of their 23 locations are located in high traffic areas, many near successful malls and tourist attractions. With the addition of Cheeseburger in Paradise, we will further enhance our competiveness and increase the Company's opportunities for revenue growth in the future."
Peter Tropoli, Chief Operating Officer, added, "With our corporate support and resources, we hope to further enhance store-level operations as well as unit economics, and we plan to benefit from synergies among our group of brands. From a guest and employee perspective, the transition should be seamless."
Luby's and Cheeseburger in Paradise have made customary representations, warranties and covenants in the Agreement, which is subject to termination by either Luby's or Cheeseburger in Paradise upon the occurrence of specified events. The transaction is expected to close on or before December 5, 2012, subject to the satisfaction or waiver of other customary closing conditions.
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