FAT Brands Inc., the global franchising powerhouse behind 18 iconic restaurant brands, has unveiled a strategic move to spin off Twin Hospitality Group Inc., a subsidiary managing well-known restaurant chains Twin Peaks and Smokey Bones. This significant transaction is set to position Twin Hospitality as a standalone public company while creating long-term value for FAT Brands’ stockholders. Below, we dive into the specifics of this spin-off, what it means for stakeholders, and its broader implications.
What is the FAT Brands Spin-Off About?
The spin-off is a major strategic initiative by FAT Brands to distribute shares of Twin Hospitality Group to existing stockholders. This move enables Twin Hospitality to operate independently, focusing on its specific market opportunities while FAT Brands retains majority ownership.
Key highlights include:
FAT Brands will distribute 5% of Twin Hospitality's fully diluted Class A Common Stock to existing stockholders.
Twin Hospitality will trade independently under the ticker symbol "TWNP" on the Nasdaq Global Market.
The remaining shares of Twin Hospitality will stay under FAT Brands’ ownership, providing a dual benefit for the parent company and its investors.
Key Dates to Remember
Stockholders and market participants should mark the following dates related to the spin-off:
Record Date: January 27, 2025
FAT Brands' Class A and Class B Common Stockholders who own shares as of the close of trading on this date will qualify for the special dividend distribution.
Distribution Date: January 29, 2025
Eligible stockholders will receive their allocated shares of Twin Hospitality on this date.
Trading Start: January 30, 2025
Twin Hospitality's Class A Common Stock will begin trading as an independent entity under the symbol TWNP.
*Ex-distribution and When-issued markets trade on January 28th and 29th, as the following : FATAV, FATBV, TWNPV
These dates are critical for investors to ensure they benefit from the transaction and understand the timing of key milestones.
Understanding the Distribution Mechanics
The spin-off distribution will occur on a pro-rata basis:
Stock Dividend Ratio: Stockholders will receive 0.1520207 shares of Twin Hospitality Common Stock for each share of FAT Brands Class A or Class B Common Stock they hold.
Fractional Shares Handling: Fractional shares will not be issued. Instead, these will be aggregated and sold in the open market, with the proceeds distributed to stockholders as cash.
Warrants Adjustment
Stockholders holding FAT Brands’ Warrants (NASDAQ: FATBW) must exercise their rights before the record date to receive the distribution. Warrants not exercised by January 27, 2025, will have their exercise price adjusted downward to account for the spin-off value.
Why is FAT Brands Spinning Off Twin Hospitality?
The spin-off reflects FAT Brands’ commitment to unlocking shareholder value while allowing its subsidiaries to scale effectively. Here are some potential benefits:
Operational Focus
Twin Hospitality will gain autonomy to execute strategies tailored to its market, focusing on its restaurant brands, Twin Peaks and Smokey Bones.
FAT Brands will concentrate on its remaining portfolio of 16 brands.
Attracting Dedicated Investment
By creating a standalone entity, Twin Hospitality can appeal to investors specifically interested in casual dining and hospitality.
Enhanced Valuation
Separating the two entities enables better market valuation of each business, reflecting their individual strengths and growth trajectories.
Strategic Flexibility
FAT Brands retains majority ownership, maintaining financial benefits from Twin Hospitality’s performance while allowing it the freedom to expand independently.
Implications for Stockholders
Immediate Impact
Share Distribution: Stockholders will gain exposure to Twin Hospitality without additional investment.
Dual Benefits: Investors retain their FAT Brands shares while acquiring new shares in Twin Hospitality.
Long-Term Value
Twin Hospitality’s independent trading will likely attract fresh investment, potentially driving share value upward.
FAT Brands' focus on its core brands may lead to stronger financial performance.
Stock Price Adjustments
The spin-off will likely cause an adjustment in FAT Brands’ stock price to reflect the value transferred to Twin Hospitality. This is common in spin-off transactions but is expected to stabilize as both entities chart their independent paths.
Market Reception and Expectations
The spin-off is expected to generate buzz in the market, particularly as Twin Hospitality prepares to debut on the Nasdaq Global Market. Analysts predict:
Increased visibility for Twin Hospitality as a casual dining-focused company.
Strong investor interest in the unique market position of Twin Peaks and Smokey Bones, both popular brands with loyal customer bases.
Enhanced growth opportunities for FAT Brands as it doubles down on its diverse restaurant portfolio.
Conclusion: A Bold Step Toward Growth
The FAT Brands spin-off of Twin Hospitality Group marks a transformative moment for both entities. As Twin Hospitality steps into its role as an independent public company, it paves the way for focused growth, operational excellence, and dedicated investor interest. Meanwhile, FAT Brands stands to benefit from enhanced market valuation and renewed attention to its robust portfolio.
Stockholders are poised to gain from this strategic transaction, reaping the benefits of exposure to both FAT Brands and Twin Hospitality. Be sure to monitor the key dates and market developments as this spin-off unfolds.
FAQs About the Fat Brands Spin-Off
Do I need to do anything to receive my Twin Hospitality shares?
No. Shares will be distributed automatically to eligible stockholders in book-entry form.
Will I lose any FAT Brands shares in this process?
No. You will retain your FAT Brands shares and receive Twin Hospitality shares as a bonus.
How will fractional shares be handled?
Fractional shares will not be issued. Instead, they’ll be sold on the open market, and you’ll receive cash for your proportional share of the proceeds.
Can I sell my Twin Hospitality shares immediately?
Yes, once trading begins on January 30, 2025, you can sell or hold your shares based on your investment strategy.
What are the risks of this spin-off?
As with any market transaction, risks include potential volatility in the share prices of both FAT Brands and Twin Hospitality. Long-term performance will depend on their strategic execution.
FATB TWNP Spin Off
FATB TWNP Spin Off