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BofA to Sell Biggest U.S. Pizza Hut Franchisee to Olympus

Nov. 7 (Bloomberg) -- Bank of America Corp. has agreed to sell its stake in the biggest U.S. Pizza Hut franchisee for about $775 million to Olympus Partners, said two people with knowledge of the deal.

Bank of America will get about $400 million in proceeds after the debt of NPC International Inc. is assumed, said the people, who declined to be identified because the terms weren’t publicly disclosed. The debt of the pizza business will be repaid by the purchaser when the deal is completed, which is expected by Dec. 28, according to a filing today from NPC.

Chief Executive Officer Brian T. Moynihan is concentrating on retail and commercial banking while scaling back assets acquired under his predecessor, Kenneth D. Lewis. The bank inherited NPC in its 2009 takeover of Merrill Lynch & Co., which bought the pizza purveyor in May 2006 for $615 million, according to a filing. Moynihan, 52, is divesting private-equity holdings that will require a greater cushion under new international rules on capital.

“These deals are getting Bank of America to a place where it’s a much simpler organization focused on the U.S. banking consumer,” said Jefferson Harralson, an analyst at KBW Inc. with a “market perform” rating on the lender. “A Pizza Hut investment very clearly doesn’t fit in with where Brian is taking the business.”

NPC was founded in 1962 and operates more than 1,100 eateries as of September. The Overland Park, Kansas-based business accounts for about one-fifth of U.S. Pizza Hut restaurants and its locations are spread across 28 states, mostly in the Midwest and South, with about 26,000 employees.

Goldman Sachs, Barclays

The acquisition is expected to be financed by a credit facility arranged by affiliates of Goldman Sachs Group Inc. and Barclays Plc, which are advising Olympus. The restaurant operator got advice from JPMorgan Chase & Co.

Jerry Dubrowski, a spokesman for Charlotte, North Carolina-based Bank of America, declined to comment on the transaction.

NPC had more than $370 million in long-term debt as of Sept. 27, the company said today in its quarterly filing. Net income in the 13 weeks ended Sept. 27 fell less than 1 percent from a year earlier to $3.47 million as higher commodity costs weighed on margins. Comparable store sales gained 0.4 percent.

Olympus Partners manages more than $3 billion for corporate pension funds, endowments and state retirement funds, according to the statement. The Stamford, Connecticut-based firm invests in health-care, financial firms and consumer businesses.

Private Equity

Bank of America has accelerated asset sales amid concern that the lender, which has lost about half its market value this year, will be overwhelmed by losses tied to soured mortgages. While Moynihan has said repeatedly that the bank will reach capital targets by selling assets deemed less important to clients, rather than selling stock, the bank said last week it may issue 400 million shares as it retires preferred securities.

Bank of America agreed in September to sell its stake in U.S. hospital operator HCA Holdings Inc., another asset acquired by Merrill Lynch’s private-equity arm in 2006. Bank of America had $3 billion in proceeds from that investment, including dividends and a March initial public offering, the firm said.

In August, the bank announced deals to divest a Canadian credit-card unit for C$7.5 billion ($7.4 billion) and sell about half its stake in China Construction Bank Corp., the world’s second-biggest lender by market value, for $8.3 billion in proceeds.

Bank of America, the second-largest U.S lender by assets, dropped 12 cents to $6.37 at 12:05 p.m. in New York.

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To contact the reporter on this story: Hugh Son in New York at hson1@bloomberg.net in New York at calesci2@bloomberg.net

To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net

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