NEW ORLEANS -- Fried chicken king Al Copeland has boosted his Popeyes Famous Fried Chicken and Biscuits empire into the No. 2 position worldwide with a successful buyout of Church's Fried Chicken for $395.4 million.
The takeover will make Popeyes second only to Kentucky Fried Chicken in the world pecking order of chicken restaurants.
The definitive merger agreement was reached late Wednesday in New York, ending a takeover fight that began in October with A. Copeland Enterprises Inc. making a $292 million tender offer of $8 a share for Church's common stock.
Under terms of the agreement, all shareholders will get $9.50 a share in cash and $1.50 in the form of a new issue of preffered stock.
The terms are higher than Church's closing price of $9 on the New York Stock Exchange on Wednesday.
Copeland's initial hostile takeover bid was rejected by Church's directors who said the offered price of $8 per share was too low, and was based on illegally used insider information provided Popeyes by a former Church's employee.
Following conclusion of the friendly deal, both sides expressed optimism about the merger.
'I am pleased we have agreed to this merger and believe it will create a very strong No. 2 fast food fried chicken chain,' said Ernie Renaud, chief executive officer of Church's. 'There is a lot of room for both Church's and Popeyes' concepts to grow and develop throughout the world.'
'We are delighted to have concluded a deal for Church's on a friendly basis,' said Copeland, chairman and chief executive officer of A. Copeland Enterprises Inc. 'Although the auction for Church's involved a highly competitive bidding process, the combination of Church's and Popeyes is a tremendous fit and in the best interest of Church's and Popeyes' shareholders, employees, franchisees and customers.'
Popeyes and Church's had combined sales in 1988 of $1 billion, compareed to $4.9 billion for Kentucky Fried Chicken.
Church's sales have fallen and profits nosedived in the pastfew years, from a peak of $42.6 million in 1984 to an estimated $3.5 million last year. In order to tighten up operations after the fight with Copeland began last October, the company closed 110 of its 1,076 stores.
Popeyes has said it will sell off or close 690 outlets, including the 110 closed during the takeover fight, and continue to operate 83 under the Church's name. The other 233 restaurants would be operated as Popeyes units.
To accomplish the merger, Copeland will take on about $300 million in debt to finance the deal.
Under its terms, Copeland will offer to buy up to 30,100,000 Church's shares, except those already owned by Copeland, for $11 a share in cash. Copeland owns 3.2 percent of Church's 36 million shares.
Shares not tendered by investors or not accepted in the tender offer will be converted into .44 of a share of preferred stock with a face value of $25. Church's financial advisors have advised the preferred stock will trade on a fully distributed basis at a substantial discount from the face amount.