Billionaire Waited Years for Sale of Wall Street Steakhouse
Tilman Fertitta had to wait to land his prize.
(Bloomberg) -- Tilman Fertitta had to wait to land his prize.
The billionaire owner of casinos, restaurants and the NBA’s Houston Rockets had coveted Del Frisco’s Restaurant Group Inc. since 2012. This summer it looked improbable that his Landry’s Inc. restaurant group would get a shot. Private equity firm L Catterton had struck a deal to acquire the high-end chain in June and, as recently as Tuesday, bankers were busy trying to sell debt to fund the transaction.
But, in a surprise twist, Fertitta popped up to snare the coveted steakhouses.
L Catterton completed its $650 million purchase Wednesday, but immediately announced it was selling Del Frisco’s Double Eagle Steakhouses and Del Frisco’s Grilles to Landry’s for an undisclosed sum. The buyout firm will keep bartaco, a purveyor of tacos and tequila, and Barcelona Wine Bar brands.
“It’s something that I’ve looked at for years and sometimes you just have to wait for the deal to come back to you,” Fertitta, 62, said in a phone interview.
Del Frisco’s operates more than 35 restaurants, including Del Frisco’s Double Eagle in Midtown Manhattan, a favorite with the finance crowd, offering its signature 45-day dry-aged double-bone prime ribeye for $140 and a tasting of three wagyu steaks at $205.
It also has locations in Boston, Philadelphia, Dallas and Houston, and one in Washington that caters to lobbyists and politicians. On the night of the deal, a sign indicated that Republican Senator Pat Toomey of Pennsylvania was there.
Despite the chain’s popularity with Wall Street, bankers labored to sell $425 million of debt to fund L Catterton’s buyout. Credit Suisse Group AG offered an all-in yield of 9.6%, people familiar with the matter said this month. But with concerns growing about the effects a potential recession may have on a cyclical business, especially expensive steakhouses and wine bars, some investors remained skeptical.
A spokeswoman for L Catterton declined to comment.
Fertitta, who’s worth $3.9 billion according to the Bloomberg Billionaires Index, also said he couldn’t comment on why L Catterton sold the assets, but he’s a big believer in steak.
The Houston businessman already owns nine steakhouse chains, including Morton’s and Mastro’s. He even opened a female-focused one with actress Eva Longoria in 2013 that’s now closed. Fertitta said he’s willing to put more equity into the Del Frisco’s business and isn’t concerned about the long-term prospects, including the threat from meat substitutes.
“I’ll do whatever I need to do,” said Fertitta, who’s also the chairman and chief executive officer of Fertitta Entertainment, which operates the Golden Nugget casinos. “Steak’s always gonna be the most popular food in the world.”
Fertitta may see a challenge from meat substitutes as consumers flock to restaurants for plant-based burgers from Beyond Meat Inc. and Impossible Foods Inc. Fertitta said the hype of meatless burgers is overblown and that consumers will return to red meat once they realize the products aren’t as healthy as they’re made out to be.
Still, he’s open to serving the trendy plant-based product “if the customers want them,” he said.
Fertitta, who counts Jefferies Financial Group Inc. head Richard Handler as a close friend, used the bank as Landry’s lead adviser on the deal, along with Deutsche Bank Securities and North Point Advisors.
To contact the reporters on this story: Austin Weinstein in Washington at aweinstein18@bloomberg.net;Sally Bakewell in New York at sbakewell1@bloomberg.net
To contact the editors responsible for this story: Pierre Paulden at ppaulden@bloomberg.net, Peter Eichenbaum, David Scheer
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