Back Yard Burgers to go private for $38 million; investors include former Sonic CEO

By Lisa Kerner

Charlotte, N.C., June 11 - Back Yard Burgers, Inc. entered into a definitive merger agreement to be acquired by BBAC, LLC and its wholly owned subsidiary, BBAC Merger Sub, Inc.

The agreement calls for Back Yard Burgers common stock and preferred stock holders to receive $6.50 per share in cash in a transaction valued at $38 million including debt.

Back Yard Burgers' board of directors unanimously approved the merger agreement and recommends its stockholders also vote in favor of the deal.

Officers and directors owning 26.74% of the outstanding capital stock agreed to vote their stock in favor of the transaction.

The transaction is slated to close in the third quarter of 2007, subject to shareholder approval and to a financing contingency. Once the merger is complete, Back Yard Burgers will become a privately held company and its common stock will no longer be publicly traded.

BBAC is an investment partnership managed by Cherokee Advisors LLC, an Atlanta-based firm. Its principal investors include Reid M. Zeising of Cherokee Advisors, Pharos Capital Group, LLC and C. Stephen Lynn, former chairman and chief executive officer of Shoney's, Inc. and Sonic Corp.

"We are very excited to be able to announce this agreement after many months of discussions with BBAC," chairman and chief executive officer Lattie Michael said in a company news release.

"For our stockholders, the $6.50 share price is significantly higher than the market price of our shares over the past two years. For our franchisees, the management team of BBAC, headed by Steve Lynn, has a proven track record in the quick service restaurant industry for growing proprietary brands."

Morgan Keegan and Co., Inc. advised Back Yard Burgers' board and provided a fairness opinion.

Memphis, Tenn.-based Back Yard Burgers operates and franchises quick-service restaurants in 20 states.

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