Citing the growing popularity of Mexican cuisine, Restaurant Associates Industries said it has agreed to acquire Pasadena-based Acapulco Restaurants in a transaction valued at about $7.7 million.
Restaurant Associates, a New York-based company that had held a 39% stake in Acapulco, will issue Acapulco stockholders one share of a new issue of Restaurant Associates non-voting convertible preferred stock for each share of Acapulco common stock. The preferred stock would have a liquidation value of $6.25 a share.
Acapulco, which operates 31 Mexican restaurants in California and Oregon, had sales for the fiscal year ended last Oct. 28 of about $38.6 million. It reported a net income of $508,000.
Martin Brody, chairman of Restaurant Associates, said that, although Mexican food "is nowhere near as popular as hamburger and pizza," consumer demand for it is growing.
"You can buy a decent (Mexican) meal at a reasonable price," Brody said.
Restaurant Associates operates 70 family-type restaurants, including 23 Charlie Brown's restaurants in the East Coast. The proposed purchase of Acapulco would extend the company's operation to the West Coast. The company had $132.4 million in revenue and an estimated $1.5 million in net income for 1984.
The deal is subject to approval by shareholders of both companies and negotiation of a definitive agreement.