Arby’s parent company Inspire Brands has agreed to buy drive-in burger chain Sonic (NASDAQ: SONC) in a deal valued at $2.3 billion. The price represents a premium of roughly 19 percent to the chain’s closing stock price on Monday. According to the terms of the deal, Sonic shareholders will receive $43.50 per share in cash. The deal is expected to close by the end of this year.
Inspire Brands has been pursuing a strategy of acquiring distinct, dissimilar brands. The company added Buffalo Wild Wings to its roster last year. It also owns Mexican food chain Rusty Taco. Atlanta-based investment firm Roark Capital, the majority owner of Inspire, also has purchased large stakes in Auntie Anne’s, Carvel, and Jimmy John’s.
Sonic fits well within this strategy. Paul Brown, Inspire’s CEO, said, “Sonic is a highly differentiated brand and is an ideal fit for the Inspire family.” Sonic will continue to operate independently after the sale from its Oklahoma City headquarters. The chain currently has more than 3,600 locations.
Inspire said that nothing major will be changing at Sonic. The chain has become famous for its retro 1950s-esque drive-in locations and distinctive menu items. Sonic’s sales at locations open at least a year have been declining for the past few quarters. Still, Sonic reported $4.4 billion in sales last year, beating Dairy Queen, Five Guys and Hardee’s, according to statistics from Nation’s Restaurant News, an industry journal.
Investors were pleased by the news. Sonic’s stock rose more than 18 percent after the announcement. Inspire Brands’ portfolio will now comprise more than 8,000 locations with combined system sales exceeding $12 billion.