FAT Brands Inc (NASDAQ:FAT) plans to pursue an initial public offering of its Twin Peaks restaurant business in a move analysts said will highlight the “significant value” in its assets.
FAT said in a statement on Tuesday that taking Twin Peaks public is intended to unlock value for its shareholders and to help facilitate continued strong growth of the restaurant chain and market segment.
“Twin Peaks was an exceptional acquisition for us in 2021,” commented FAT co-CEO and chief financial officer Ken Kuick.
“We believe that creating a separate publicly traded company will provide the best opportunity to further enhance the brand, capitalize on its expansion plans and build upon its position as a leader in the sports lodge dining category.”
Analysts at Noble Capital Markets agree, maintaining their ‘Outperform’ rating and $25 price target on the stock.
They noted that applying the multiples that restaurant chain Cava Group is aiming for with its just-announced IPO, and those achieved by Portillo’s Inc. in late 2021, suggests a value for FAT’s “crown jewel” in excess of $1 billion based on estimated 2026 adjusted underlying earnings (EBITDA).
“We believe an IPO is but one option available to management to unlock value for shareholders,” the analysts wrote in a client note.
“Other options could involve just an outright sale of the unit or a spin-off of the business to existing shareholders. We believe any scenario will highlight the significant value in FAT Brands’ assets.”
Contact the author at stephen.gunnion@proactiveinvestors.com