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Great American, Kayne Anderson Capital Advisors Support Franchise Group’s Acquisition of American Freight Group

December 30, 2019, 09:00 AM
Filed Under: Mergers & Acquisitions

Franchise Group Inc. (FRG) agreed to buy American Freight Group Inc., a retail chain offering brand-name furniture, mattresses and home accessories at discount prices, in an all cash transaction valued at about $450 million from an affiliate of The Jordan Company, L.P. and other stockholders of American Freight.

The Transaction is expected to be completed in the first quarter of 2020, subject to the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as well as other customary closing conditions.

In connection with the signing of the Transaction, Franchise Group intends to sign a new $700 million credit facility with affiliates of Kayne Anderson Capital Advisors, L.P. (“Kayne”) and Great American Capital Partners, LLC (GACP), a subsidiary of B. Riley Financial, Inc., that will provide 100% of the financing needed for the Transaction, including the refinancing of the Company’s term loans for its Buddy’s Home Furnishings and Sears Outlet businesses (the “Financing”). The Financing will close simultaneously with the Transaction. B. Riley FBR, Inc. and Kayne acted as advisors for the Transaction.

Brian Kahn, President & CEO of Franchise Group said, “We are proud to welcome American Freight, its management team and employees to the Franchise Group. American Freight is a deep value, category-defining furniture retail model with a compelling, proven track record of growth and stability throughout economic cycles.” Mr. Kahn continued, “American Freight’s unmatched cash-on-cash unit economics make it an attractive opportunity for franchisees to benefit from a clear whitespace growth opportunity. We expect that combining American Freight with our similarly large-format Sears Outlet business and our small-format Buddy’s Home Furnishings business will generate significant economic synergies over time that will be realized from leveraging corporate overhead, vendor and franchisee partnerships, operating methods, and a common customer base.”

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