Thursday, May 5, 2011

What else is on Landry's plate

The leadership team at Landry’s Restaurants must be a tuckered bunch. They’re in the midst of a remarkably shrewd attempt to take control of McCormick & Schmick’s, a competitor of the company’s namesake brand. But that’s just one of the matters that likely has them gulping coffee and dreaming of vacation.

There’s also a lawsuit arising from an earlier acquisition, revealed as part of the thrust and parry with McCormick & Schmick’s management. The executives filed a PowerPoint presentation yesterday with the U.S. Securities and Exchange Commission that spells out why they’d rejected Landry’s $9.25-a-share purchase offer. The presentation is apparently being given to shareholders, and hence had to be put on record with federal regulators.

Among the stated reasons for opposing the takeover are the alleged “dubious dealings” of Landry’s and its principal owner, Tilman Fertitta. The pertinent slide asserts that Fertitta has used “coercive tactics” in past takeover attempt. It cites the example of Fertitta’s release of an offer to buy Smith & Wollensky without the steakhouse chain’s permission.

McCormick & Schmick’s apparently thinks it’s coercive to let shareholders know what a prospective buyer is willing to pay, instead of letting the seller’s management filter that information to the owners.

The dubious-dealings slide also cites a lawsuit filed on April 27 by the former owners of Bubba Gump Shrimp Co., the Forrest Gump-themed dinnerhouse chain that Landry’s acquired last year. According to McCormick & Schmick’s, the suit accuses Landry’s of breaching its fiduciary responsibilities to the sellers.

No details were provided, and a number of internet searches turned up nary a word. Landry’s, as a private company, typically doesn’t discuss such matters.

If that’s all the team at Landry’s had on their plate, they’d be excused for looking a little haggard. But they also have to prepare for the likelihood of getting a green light on another acquisition, the purchase of an Atlantic City casino from Donald Trump.
Landry’s offer of $38 million has already been accepted. But the sale and changeover of the property to a Golden Nugget casino-hotel has yet to be approved by state gaming regulators.

Meanwhile, there’s still the issue of bagging McCormick & Schmick’s. As the company had said in an earlier SEC filing, it thinks Landry’s is trying to lowball the market with its $9.25 bid. So, it announced, management was commencing a formal sale. Suitors welcomed.

Fertitta responded by praising the company for realizing it should change hands. He then dropped his hostile takeover attempt and announced he’d pursue the company in the very fashion it preferred. He’d get in touch with the appropriate sales agents and begin the negotiations.

You have to wonder how he’ll respond if they show him the PowerPoint presentation.

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