Vitamin Shoppe Owner Franchise Group Considers Going Private
Franchise Group is also exploring deal to buy furniture chain Conn’s
Franchise Group Inc., FRG 0.70% the investment firm that owns retailers including Vitamin Shoppe, is considering going private in a so-called management buyout, people familiar with the matter said.
The company’s management, led by Chief Executive Officer Brian Kahn, could pay a price of between $30 and $35 a share, the people said. Franchise Group shares closed Monday at $29.92 after rising sharply in recent days.
The stock ended 2022 at $23.82—right as the deal talks kicked off, the people said—so a range of $30 to $35 would represent a premium of roughly 25% to 45% to that. The talks are at an early stage.
Franchise Group’s market capitalization is about $1.1 billion and it has more than $1.1 billion of debt.
The firm is separately eyeing a potential deal to acquire furniture chain Conn’s Inc., CONN 14.91% the people said. Conn’s had a market cap of roughly $215 million Tuesday afternoon.
It is possible neither transaction will come to pass, or that both will, the people said.
Franchise Group shares, which hit an all-time high of $55.10 in December of 2021, have fallen sharply since then as consumers have pulled back their spending on home goods and other discretionary items, sending retail valuations plummeting.
Mr. Kahn owned about 28% of Franchise Group’s overall voting power as of June, according to securities filings.
Franchise Group, which owns a handful of consumer-facing businesses including Vitamin Shoppe, discount-furniture and mattress supplier American Freight and Pet Supplies Plus, made headlines last year when it put in a bid for the department store chain Kohl’s Corp. Those talks fizzled, however, amid rising interest rates and an uncertain economic environment that had a chilling effect on deal making, especially in retail.
Franchise Group, which was founded in 2019, reported total revenue of $1.1 billion in the three-month period ended Sept. 24., with a net loss of $121.2 million.