(Bloomberg) -- Sixth Street has reached a deal to acquire a majority stake in the UK franchise of fast-growing fried chicken chain Wingstop.
The investment firm will invest in Lemon Pepper Holdings, which operates the Wingstop franchise in the UK and Ireland, according to a statement Sunday. Co-founders Tom Grogan, Herman Sahota and Saul Lewin, along with Wingstop Inc., will remain minority shareholders.
Sixth Street paid more than £400 million ($503 million) for the deal, according to people with knowledge of the matter who asked not to be identified discussing confidential terms. At that amount, Wingstop would be fetching among the highest multiple ever for a quick-service restaurant chain, helped by becoming the fastest-growing brand in that space in the UK.
More than a dozen suitors expressed interest in Wingstop UK earlier in the process, some of the people said. Bidders included investment firms KKR & Co., TSG Consumer Partners and London-listed restaurant franchisee Domino’s Pizza Group Plc, they said.
Wingstop started in the US and now has more than 1,500 restaurants globally. Its menu features chicken with flavors including hickory smoked BBQ, Louisiana rub, Brazilian citrus pepper and mango habanero, as well as an ultra-spicy “atomic” offering. The chain has expanded rapidly in the UK, opening its 50th site in August in Bolton in greater Manchester and recently adding locations in Uxbridge and Bradford.
The British franchise was set up by entrepreneurs Lewin, Grogan, Sahota and Paddy Bamford. They opened their first store in 2018 and will have 57 sites across the UK by the end of the year, with a goal of reaching 200 location within the next five years. Revenue is expected to exceed £150 million this year.
Goldman Sachs Group Inc advised on the deal, led by Head of UK Coverage Khamran Ali, according to the statement. Sixth Street worked with North Point and Lazard & Co.
The chain’s Texas-based parent Wingstop Inc. has seen its shares gain 13% in New York trading this year, giving the company a market value of about $8.5 billion. It bought a minority stake in the UK franchise in 2021.
Any deal would add to the $10 billion in mergers and acquisitions in the restaurant industry this year, data compiled by Bloomberg show. Darden Restaurants Inc. agreed in July to acquire Tex-Mex chain Chuy’s Holdings Inc. for about $605 million, while the owner of Burger King bought its biggest US franchisee earlier in the year.
The UK has also been active, with Fortress Investment Group reaching a £338 million deal last month to take over Loungers Plc, the operator of Cosy Club bars and Brightside restaurants.
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