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NPC to acquire, sell Pizza Hut units
November 5, 2008
OVERLAND PARK, Kan.-- NPC International Inc., the largest Pizza Hut franchisee, has entered into two agreements with Pizza Hut Inc., the company announced.
In the first deal, NPC has agreed to purchase 89 Pizza Hut units from PHI for $26.4 million in cash. In the second, PHI will purchase from NPC 70 Pizza Hut units for $19.6 million in cash and NPC has agreed to purchase from PHI for cash 102 Pizza Hut units for $26.5 million.
The units being sold by PHI include 41 fee-owned locations. NPC will acquire one of these properties included in the deal and lease 40 of them from PHI. The units being sold by NPC include 2 fee-owned locations that will be leased to PHI. These acquisitions by NPC will be funded with proceeds from the sale of Pizza Hut units to PHI, borrowings on NPC's $75.0 million revolving credit facility and available cash reserves.
Eighty-two of the units involved in the first deal are located in and around Tampa, Fla., while seven are located in rural Cedar Rapids, Iowa, and are comprised of 46 delivery/carry-out units and 43 dine-in restaurants. According to information provided to NPC, 86 of the units to be acquired by NPC generated $79.1 million in net product sales during the 52 weeks ended September 2008; the remaining 3 units to be acquired were recently constructed or are currently under construction and not included in the net product sales total.
NPC expects the closing to occur in December 2008, subject to certain conditions.
Fifty-two of the units involved in the second deal are located in and around Kansas City, while 50 are located in the Atlanta area, and are comprised of 70 delivery/carry-out units and 32 dine-in restaurants. According to information provided to NPC, 99 of the units to be acquired by NPC generated $94.3 million in net product sales during the 52 weeks ended September 2008; the remaining threee units to be acquired were recently constructed or are currently under construction and not included in the net product sales total.
The units to be sold by NPC are located in and around Jackson, Miss. (27), Spokane, Wash. (20), Savannah, Ga. (20), and rural Jacksonville, Fla. (3), and are comprised of 20 delivery/carry-out units and 50 dine-in restaurants. Sixty-eight of the units to be sold by NPC generated $54.4 million in net product sales during the 52 weeks ended September 2008; the remaining two units to be sold were recently constructed or are currently under construction and not included in the net product sales total.
NPC expects the sale to close in December 2008.
"The net effect of these transactions will increase our operations to almost 1,100 Pizza Hut units, or 18 percent of the entire domestic Pizza Hut system," said Jim Schwartz, chairman and CEO of NPC International. "We are strong believers in the Pizza Hut brand and believe that now is an excellent time to increase our investment in the brand while maintaining the requisite financial flexibility to navigate these not-so-ordinary times."
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