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TGI Fridays in talks to sell itself to TriArtisan

• Deal could fetch $800-900 mln

• Sentinel Capital is partner in bid

• TGI had 2012 revenue of $2.7 bln

TriArtisan, the private equity arm of investment bank Morgan Joseph, has emerged as the lead bidder in the auction for TGI Fridays and is negotiating final terms of a purchase agreement, the people said.

TriArtisan is partnered with another buyout firm, Sentinel Capital Partners, in its bid, two of the people added.

The exact price under negotiation could not be learned, but people familiar with the deal previously told Reuters the restaurant chain could be valued in the $800 million to $900 million range.

All the people spoke on condition of anonymity because the talks are confidential, and cautioned that the negotiations could still fall through. Representatives for TriArtisan, Sentinel and TGI Fridays did not immediately respond to requests for comment.

Privately held U.S.-based hotel conglomerate Carson said in November it had asked investment bank Piper Jaffray to explore strategic alternatives for TGI Fridays, including a possible sale. Piper Jaffray declined to comment on Friday.

Consumers are shunning restaurants that offer table service in favor of faster, cheaper options, prompting some owners of full-service casual dining chains such as TGI Fridays to explore a sale in the hope of attracting a high valuation.

Still, the outlook for the U.S. restaurant industry remains far from rosy. U.S. restaurant industry sales are expected to top $683 billion in 2014, an increase of 3.6 percent from last year, according to the National Restaurant Association. The projected rise would be an improvement from 2008 and 2009, but would still lag growth levels before the recession.

TGI Fridays operates more than 900 restaurants, including more than 550 in the United States and the rest in more than 60 other countries. It generated revenue of $2.7 billion in 2012, up 5 percent from the year before.

About half of TGI Fridays restaurants in the United States are operated by the company and the other half are franchise-operated, as opposed to the rest of the world, where most restaurants are franchise-operated, according to its website.

TGI Fridays, which opened its first establishment in 1965 in New York, claims to have popularized the term “happy hour,” in which patrons gather after work for food and drink specials. Its American cuisine includes burgers, chicken wings and buffalo mozzarella sticks.

TriArtisan was founded in 2002. It merged with Morgan Joseph in 2011.

A deal for TGI Fridays would be the latest in a string of private equity transactions involving restaurants.

In January, Apollo Global Management LLC agreed to acquire Chuck E Cheese parent CEC Entertainment Inc for $1.3 billion, and in December Roark Capital Group acquired CKE Inc, whose brands include Carl’s Jr. and Hardee’s, from Apollo in a roughly $1.7 billion deal.

Other restaurant chains currently up for sale include Ruby Tuesday Inc and Dave & Busters.

Greg Roumeliotis and Olivia Oran are reporters for Reuters News in New York