RCI Hospitality Shares Surge After Acquiring 11 Adult Nightclubs For $88M

RCI Hospitality Holdings Inc RICK has acquired 11 adult nightclubs, six related real estate properties, and associated intellectual property, for $88 million. Troy Lowrie of Lakewood, Colorado, controls nine of the acquired 11 nightclubs.
The deal's total value includes $57.0 million for the 11 clubs, $18.0 million for the six real estate properties, and $13.0 million for the intellectual property.
The deal will expand RCI's geographic footprint with five locations in Denver, Colorado; two near St. Louis, Missouri; and one each in Indianapolis, Indiana; Louisville, Kentucky; Raleigh, North Carolina; and Portland, Maine.
The clubs generated about $40 million in revenue and $14 million in adjusted EBITDA in their fiscal year ended December 31, 2019.
"We believe the quality of the clubs' licenses and locations enhance the value of the collective acquisition to us," said CEO Eric Langan.
It anticipates the deal to be accretive in year one.
It plans to pay $26.0 million in cash, $30.0 million in restricted common stock, $21.2 million in seller financing, and $10.8 million in commercial real estate bank financing. It plans to fund the cash payment by borrowing from third-party lenders.
RCI held $20.2 million in cash and equivalents as of March 31, 2021.
Price action: RICK shares are trading higher by 14.5% at $67.19 on the last check Monday.