The corporate parent of Hardee's, the hamburger chain with a long history in Eastern North Carolina, is changing hands.
CKE Restaurants, which acquired Hardee's in 1997 and also owns the Carl's Jr. fast-food chain, announced Friday it agreed to be bought by a Boston-based private equity firm for about $928 million.
The takeover by Thomas H. Lee Partners LP comes as consumers cut back on eating out during the recession. Carl's Jr. is heavily concentrated in California, which has been hit hard by the housing slump and soaring unemployment. Sales at CKE's restaurants open at least a year fell 6 percent in the latest quarter.
"It's been a tough time for the [fast food] restaurant space, so valuations have come down," Morningstar analyst R.J. Hottovy told The Associated Press. "I think this private equity firm probably saw some opportunity."
Known for Hardee's Thickburgers and other fare, CKE has also gained notoriety for controversial TV ads aimed at its core customer base of young men that have featured stars such as Kim Kardashian and Paris Hilton.
Last summer, Hardee's largest franchisee, Boddie-Noell Enterprises of Rocky Mount, attracted national attention when it refused to run ads for the chain's breakfast Biscuit Holes. The company, which owns 340 Hardee's outlets in four states, said the ads were in bad taste.
One spot asked customers to choose between the "B-holes" and the "A-holes." In December, the ad took top honors on TBS' "Funniest Commercials of the Year."
Boddie-Noell officials declined to comment Friday about the CKE acquisition.
Thomas Lee will pay CKE investors $11.05 in cash for each share they hold. That's 24 percent more than CKE's closing price of $8.91 on Thursday. The stock traded above $20 in 2007, but slumped with the economy.
CKE's shares jumped $2.46 to $11.37 on Friday. That price suggests that investors expect a higher price from Thomas Lee or another suitor. As part of its agreement, CKE will "actively solicit" better offers until April 6.
The deal with Thomas Lee will "benefit all of our stakeholders, including our franchisees and our employees," CKE chief executive Andrew Puzder said in a prepared statement.
Yum Brands, the parent corporation of Pizza Hut and Taco Bell, was rumored to be interested in buying CKE, said Conrad Lyon, who follows CKE's stock for Global Hunter Securities in Newport Beach, Calif.
Thomas Lee was part of an investment group that bought the parent of Dunkin' Donuts in 2006. It's likely that Thomas Lee is interested in trying to bolster breakfast sales at Hardee's by adding doughnuts to its menus "and cross-promoting its brands," Lyon said.
Free to experiment
A private company would have more freedom to experiment with other changes, such as value menus, something Hardee's has mostly avoided, Lyon said.
Thomas Lee might try to sell more of the CKE-owned restaurants to its franchisees, Lyon said. That could give Boddie-Noell an opportunity to expand its business.
Boddie-Noell now owns about 130 Hardee's stores in North Carolina, including 10 in the Triangle.
Hardee's is by far the biggest part of Boddie-Noell's empire, which includes the Cafe Carolina & Bakery and Texas Steakhouse & Saloon chains, as well as Moe's Southwest Grill franchises and other holdings.
The first Hardee's opened in Greenville in 1960.
In a blow to this state, CKE moved the chain's corporate headquarters out of Rocky Mount in 1999 and cut hundreds of local jobs.
