Mediterranean culinary brand Cava Group has signed a definitive agreement to acquire US fast casual restaurant group Zoe’s Kitchen.
Zoe’s Kitchen currently operates 261 domestic restaurant locations, while Cava operates 66 restaurants in the US.
Following the $300m transaction, the combined entity will have 327 restaurants in 24 US states.
Zoe’s Kitchen chief executive officer Kevin Miles said: “Our mission was to deliver the highest value obtainable for our shareholders and pursuant to the transaction announced, our shareholders will be receiving a substantial premium to the company’s unaffected stock price.
“I am proud of the significant work the team has executed over recent years to grow the Zoe’s Kitchen footprint, build brand affinity and secure a leadership position in the Mediterranean and better-for-you category.
“These efforts made it an attractive candidate for a transaction of this kind. I’d like to thank each and every team member who will continue to make Zoe’s a differentiated dining experience every day.”
Cava Group will finance the deal through an equity investment led by Act III Holdings, as well as funds advised by The Invus Group with participation from existing investors such as SWaN & Legend Venture Partners and Revolution Growth.
Cava Group chief executive officer (CEO) Brett Schulman will become the CEO of the combined company following the transaction and Act III Holdings CEO Ron Shaich will serve as chairman.
Schulman will work closely with the existing leadership teams at both the companies to oversee their growth and evolution.
Shaich said: “As a close observer of the fast-casual restaurant industry, I am thrilled at the prospect of what Cava and Zoe’s Kitchen can accomplish together. Together these businesses will create the leading company in one of the most important categories in fast casual today, Mediterranean, with the capabilities to drive extraordinary customer satisfaction and powerful growth.”
The merger is subject to certain closing conditions, including the adoption of the merger agreement by Zoe’s shareholders. It is expected to close in the fourth quarter of this year.
As part of the agreement, Cava Group agreed to pay Zoe’s Kitchen’s $17m termination fee if the merger agreement is terminated under certain circumstances and if the merger does not occur.