Exclusive: TriArtisan Partners in lead to buy Carl's Jr. chain owner - sources

Mon Nov 18, 2013 6:12pm EST
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By Olivia Oran and Soyoung Kim

NEW YORK (Reuters) - TriArtisan Capital Partners is in the lead to acquire CKE Inc, the restaurant group that owns the Carl's Jr. and Hardees fast food chains, in a deal approaching $2 billion, according to people familiar with the matter.

The little known private equity firm, a unit of investment bank Morgan Joseph, has emerged as the frontrunner in an auction that also drew interest from Roark Capital Group, Carlyle Group LP (CG.O: Quote) and Onex Corp OCX.TO, the people said on Monday, adding that the process is in the final stages.

Apollo Global Management LLC (APO.N: Quote), which took CKE private for nearly $700 million in 2010, is considering a sale of the company after postponing plans for an initial public offering last year, Reuters reported in July.

Discussions with TriArtisan may yet fall apart and Apollo could still turn to other interested parties or pursue an IPO instead as valuations for newly public restaurant chains such as Noodles & Co (NDLS.O: Quote) and Potbelly Corp (PBPB.O: Quote) remain strong, the people cautioned, asking not to be named because the process is confidential.

CKE, Onex, Carlyle and Roark Capital could not be reached for comment. TriArtisan Partners and Apollo declined to comment.

Carpinteria, California-based CKE intended to raise up to $213 million in an August 2012 IPO, but did not go ahead citing market conditions, and completed a $1 billion refinancing in April.

The company, with more than 3,000 owned or franchised locations across 42 U.S. states and 25 countries, competes with fast-food companies such as McDonald's Corp (MCD.N: Quote) and Burger King Worldwide Inc BKW.N.

In the fiscal year ended January 2013, CKE was expected to generate earnings before interest, taxes, depreciation and amortization of $218 million to $219 million.   Continued...

Andrew Puzder, CEO of CKE Restaurants, takes part in a panel discussion titled "Understanding the Post-Recession Consumer" at the Milken Institute Global Conference in Beverly Hills, California April 30, 2012. REUTERS/Fred Prouser