Diversified Restaurant will acquire nine Buffalo Wild Wings restaurants in Chicago, US. Credit: Alexander Migl / fr.m.wikipedia.org.

Diversified Restaurant Holdings has signed an agreement to purchase nine Buffalo Wild Wings (BWW) restaurant locations in Chicago, US, for $22.5m.

According to the company, the nine restaurants generated around $32.7m in revenue and $4.5m of EBITDA last year.

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The transaction is subject to franchisor consent and waiving of its right of first refusal, as well as customary closing conditions. It is expected to close in the second quarter of this year.

Diversified Restaurant Holdings president and CEO David G Burke said: “Given our excitement with the changes being made at BWW, we believe that prudent, timely expansion will deliver shareholder value.

“This transaction is particularly attractive to us because the restaurants are located within our existing Midwest footprint, centred in the Chicago market area where we currently have nine other locations.

“With this additional scale, we expect to further leverage our infrastructure, systems, marketing spend and leading operational expertise to drive improved results in these locations.”

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“We expect to further leverage our infrastructure, systems, marketing spend and leading operational expertise to drive improved results in these locations.”

Burke added: “We are evaluating various alternatives to financing this transaction, which presents a tremendous recapitalisation opportunity for DRH aimed at adding longer-term stability and driving future value creation.”

The company has reported $39.1m total revenue for the preliminary fourth quarter (Q4) of 2018, compared with $41.9m for the same period the previous year. However, the company’s same-store sales grew by 2.2% in Q4.

Total revenue for the full year is estimated to be $153.1m compared with $165.5m in 2017.

Diversified Restaurant currently has 64 franchised Buffalo Wild Wings restaurants in Florida, Illinois, Indiana, Michigan, and Missouri.