NEW YORK ( TheStreet) -- The ONE Group's (STKS) agreement to acquire the Katsuya and Cleo restaurant brands is more than a simple merger of surf and turf. It's a transformative deal, said Jonathan Segal, CEO of the high-end steakhouse operator.
"Katsuya and Cleo are a very similar style of operations," said Segal. "In fact, we say Katsuya is to sushi as STK is to steak and Cleo is to Mediterranean. The type of market that they cater to is exactly the same as the STK market."
The ONE Group Hospitality announced earlier this month that it was purchasing the Katsuya and Cleo restaurant brands from SBEEG Holdings for $75 million in cash and 200,000 warrants at an exercise price of $5 per share. Segal anticipates that there will be up to 12 owned and managed/licensed Katsuya and Cleo locations globally by the end of 2015.
There are currently nine Katsuya restaurants operating: four in Los Angeles, three in the Middle East, and one each in South Beach and Las Vegas. An additional location is expected to open at the Baha Mar in the Bahamas. There are three Cleo locations in Los Angeles, Las Vegas and Miami, and another will be opening at Baha Mar as well.
"It increases our portfolio of restaurant brands, which we can then use in our hotel portfolio program where we go into hotels and we take over their entire food and beverage program," said Segal of the acquisitions.
Pending the completion of the transaction, Segal said the company's pro forma 2014 adjusted EBITDA would have been approximately $14.9 million, up from $7.8 million as originally reported by the ONE Group, by combining the Katsuya and Cleo brands with its restaurant and hospitality businesses.
Segal added that the deal will be both synergistic and additive to growth, since the existing domestic restaurants are in markets the ONE Group currently operates in, as well as new markets like the Middle East.
"It will help us to understand how to operate in those markets because the natural progression is for us to take STK and STK Rebel, the underbrand of STK, into those markets as well," said Segal.