Newsletter Edition 47
Nov 22, 2024
4 min read
AeroVironment to Acquire Space Tech Firm BlueHalo in $4.1 Billion Deal
AeroVironment, a leading drone manufacturer, has announced its plan to acquire BlueHalo, a defense and space technology firm backed by private equity firm Arlington Capital Partners, in an all-stock transaction valued at approximately $4.1 billion, according to a Reuters report. The deal marks a significant step in AeroVironment’s strategy to diversify its offerings in response to rising global security concerns.
Under the terms of the agreement, AeroVironment will issue approximately 18.5 million shares to BlueHalo. Following the merger, AeroVironment shareholders will own 60.5% of the combined entity, while BlueHalo’s equity holders, including Arlington Capital, will retain a 39.5% stake. Arlington will also maintain a "significant" interest in the merged company. The transaction is expected to close in the first half of 2025.
The acquisition will position the combined company as a stronger player in critical defense and space technology markets, with expanded capabilities in areas such as Counter-Unmanned Aerial Systems (Counter-UAS) to address drone threats and advanced space technologies, including laser communication systems.
While AeroVironment has experienced strong performance this year—its shares have risen 56%—the announcement led to a 3.6% dip in premarket trading.
Following the merger, Wahid Nawabi, CEO of AeroVironment, will lead the combined organization. BlueHalo’s CEO, Jonathan Moneymaker, will transition to a strategic advisory role supporting Nawabi.
The acquisition reflects AeroVironment’s commitment to expanding its footprint in high-growth sectors of the defense and aerospace industry, leveraging BlueHalo’s expertise in innovative technologies to meet evolving global security challenges.
Blackstone to Acquire Jersey Mike’s Subs in $8 Billion Deal
Private equity powerhouse Blackstone has announced plans to acquire Jersey Mike’s Subs, a fast-casual sandwich chain, in a deal reportedly valued at approximately $8 billion, including debt. Founder and CEO Peter Cancro will retain a significant equity stake and continue to lead the company.
Jersey Mike’s, known for its fresh-sliced and grilled sub sandwiches, operates over 3,000 locations across the United States. The partnership with Blackstone aims to accelerate the chain’s expansion domestically and internationally while supporting continued investment in technology and digital transformation, according to a press statement.
The acquisition aligns with Blackstone’s strategy of investing in scalable, franchise-based businesses. Earlier this year, the firm agreed to acquire Tropical Smoothie Cafe, another fast-growing food franchise. Blackstone’s previous investments include its 2007 purchase of Hilton Hotels and a stake in Servpro, a restoration services franchise.
Private equity interest in franchise operators has surged in recent years, with notable transactions like Roark Capital’s 2023 acquisition of Subway for up to $9.55 billion, including debt. Franchise-based businesses are increasingly attractive to investors for their steady royalty income, scalability, and lower operational costs compared to company-owned models.
The Jersey Mike’s deal underscores Blackstone’s confidence in the fast-casual sector and the potential for further growth, driven by strong brand loyalty and operational efficiency. With Blackstone’s resources and expertise, Jersey Mike’s is poised to expand its footprint and strengthen its position as a leader in the sandwich franchise market.
https://www.financierworldwide.com/fw-news/2024/11/21/blackstone-acquires-jersey-mikes-in-8bn-deal
Thompson Street Considers $1 Billion Sale of Freddy’s Frozen Custard & Steakburgers
Thompson Street Capital Partners, the private equity owner of Freddy’s Frozen Custard & Steakburgers, is reportedly exploring a sale of the fast-casual restaurant chain, aiming for a valuation exceeding $1 billion, including debt. According to Reuters, investment bank William Blair has been engaged to manage the sale process, which is expected to draw significant interest from other private equity firms.
Freddy’s, acquired by Thompson Street in 2021, could command a valuation exceeding 20 times its annual core earnings, in line with recent industry transactions, according to sources cited by Reuters. Neither Thompson Street, Freddy’s, nor William Blair have commented on the matter.
Franchise-driven restaurant chains like Freddy’s are increasingly attractive to private equity investors due to their steady royalty income and lower operational costs compared to company-owned models. This trend is reflected in recent major deals, including Blackstone’s $8 billion acquisition of Jersey Mike’s and Sycamore Partners’ purchase of Playa Bowls.
Founded in 2002 in Wichita, Kansas, by Bill and Randy Simon and Scott Redler, Freddy’s was named in honor of the Simon brothers’ father. The chain has grown to over 500 locations across North America, primarily operated by franchise partners. Known for its steakburgers, custard offerings, and retro ambiance, Freddy’s competes with other fast-casual burger chains, carving out a loyal customer base in a competitive market.
The potential sale highlights private equity’s continued appetite for scalable, franchise-based restaurant concepts, particularly as the sector demonstrates resilience and profitability.