Vitamin Shoppe parent Franchise Group to go private in $2.6B management buyout

Secaucus-based Vitamin Shoppe‘s parent company, Franchise Group, entered into an agreement to be taken private by a group led by CEO Brian Kahn in a deal valued at about $2.6 billion, the company said on Wednesday.

The management group, in financial partnership with a consortium that includes B. Riley Financial Inc. and Irradiant Partners, will acquire the approximately 64% of the company’s issued and outstanding common stock that the management group does not presently own or control.

Franchise Group owns and operates a number of “franchised and franchisable” businesses that include the Vitamin Shoppe as well as Pet Supplies Plus, Wag N’ Wash, American Freight, Badcock Home Furniture & More, Buddy’s Home Furnishings and Sylvan Learning. In total, Franchise Group currently operates more than 3,000 locations, predominantly in the U.S., that are either company-run or operated by franchisees or dealers.

“This transaction is an exciting milestone for our company,” Matt Avril, chairman of the board of directors and the Special Committee of Franchise Group, said. “The Special Committee and its advisers conducted an independent process and review of the strategic alternatives available to the company, with a focus on obtaining the best outcome for public stockholders. We believe the proposed transaction delivers immediate and certain value for public stockholders at a significant premium to the unaffected share price, and we have the flexibility to explore other potential transaction opportunities during the go shop period under the merger agreement.”

Under the proposal, Franchise Group common stockholders other than the management group will receive $30 in cash for each share of common stock they hold, representing a premium of 31.9% over the company’s closing common stock price on March 17, which was the last trading day before the company announced the receipt of the unsolicited proposal to be acquired.

The proposed merger is anticipated to close in the second half of 2023, subject to satisfaction or waiver of customary closing conditions.

Upon completion of the proposed merger, Franchise Group will become a private company and will no longer be publicly listed or traded on Nasdaq. Franchise Group’s management team, including Kahn, is expected to continue to lead the company. Franchise Group plans to continue to operate its current portfolio of highly recognized brands.