An RCI Hospitality Holdings subsidiary has reached a $6.5m agreement to purchase all issued and outstanding shares of common stock of the company that owns VIP’s Gentlemen’s Club in Chicago, US.

VIP’s is the one out of three gentlemen’s clubs in Chicago with a full liquor licence, and has ‘grandfathered’ use.

Covering 10,000ft², VIP’s club started its operation in 1993. The upscale club is next to Chicago’s chic Lincoln Park neighbourhood and minutes away from the city’s famous North Michigan Avenue and Gold Coast.

Additionally, RCI said that one of its subsidiaries has signed a definitive agreement to acquire the club’s real estate for $4m in cash.

Commenting on the deal, RCI president and CEO Eric Langan said: “We’re excited about VIP’s joining our portfolio of high-quality clubs in top 20 metropolitan markets.

“The acquisition also fits our capital allocation strategy in terms of valuation and cash on cash return.”

“VIP’s fits perfectly in line with our goal of acquiring profitable, cash-flowing number one locations. With its ability to generate $2m annually in Adjusted EBITDA, the acquisition also fits our capital allocation strategy in terms of valuation and cash on cash return.”

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Under the agreement, the transaction price includes $2m cash consideration and $4.5m seller financing.

Subject to transfer of all necessary permits, licences and other authorisations, the transactions are pending usual closing conditions, including due diligence.

RCI subsidiaries own more than 40 gentlemen’s clubs, sports bars and restaurants across the US.

In August, an RCI subsidiary signed a definitive agreement to purchase Blush Gentlemen’s Club & Sports Bar for $15m.