H.I.G. Capital puts Hooters up for sale

Hooters has hired Piper Jaffray to find a buyer, the sources said.

The restaurant chain was acquired in 2011 by a consortium including H.I.G. Capital, Karp Reilly and Chanticleer Holdings. H.I.G. has a majority stake.

It’s unclear if Chanticleer is part of the Hooters sale. The Charlotte, N.C.-based holding company is a franchisee owner of Hooters restaurants in international markets such as Australia and England. Chanticleer owns two Hooters in the United States, an October statement said.

Atlanta-based Hooters of America operates and franchises more than 430 Hooters locations in 28 countries. Hooters serves items such as soups, salads, seafood, hot wings and “hooterstizers,” which include cheese sticks, fried pickles and Tex Mex nachos.

The restaurant chain produces EBITDA of around $60 million, according to Mergermarket, which first reported the Hooters sale. The restaurant company is also considering an IPO, but a sale is more likely, Mergermarket said. Hooters will likely sell for around 7x to 7.5x EBITDA, according to two of the sources, who are bankers.

Hooters is an orphan at H.I.G. now that Tim Armstrong has left the PE firm, one of the bankers said. Armstrong was a managing director in H.I.G.’s middle-market business and was a director of Hooters of America. H.I.G. closed its second middle-market LBO fund at its $1.75 billion hard cap last year.

Bankers pointed to TGI Friday’s sale to Sentinel Capital and Tri-Artisan Capital last year as the best comparison for Hooters. Sentinel/Tri-Artisan acquired TGI Fridays for $890 million or 7.5x. Hooters “is probably a stronger brand with better current trends,” the banker said.

Hooters declined comment. H.I.G., Karp Reilly, Chanticleer and Piper Jaffray could not immediately be reached for comment.