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.
Showing posts with label Landry's. Show all posts
Showing posts with label Landry's. Show all posts
Thursday, May 5, 2011
Tuesday, November 3, 2009
News roundup for a Special Edition day
Today’s definitely a high point in the news cycle. The business day is only a few hours old, yet we’ve already seen…
The startling announcement that OSI Restaurant Partners, the troubled parent of Outback Steakhouse and four other casual-dining chains, has reached outside the business to tap the president of Avon as its new CEO. Yes, that’s Avon, as in “ding-dong, Avon calling.” The new hire, Liz Smith, has worked in the food business, but on the grocery side, serving as the president of Kraft Food’s U.S. operations.
Smith will succeed Bill Allen, who will continue as chairman after his retirement from the corner office on Nov. 15. Allen is one of the gems of the business, so its fortunate he’ll still be involved, albeit somewhat at arm’s length.
After nearly two years of trying, and showing how shrewd of a tactician he can be, Tilman Fertitta has succeeded in getting Landry’s Restaurans to let him take it private.
Fertitta, the company’s founder and CEO, already owned 55% of Landry’s stock, so you’d think it would have been a cakewalk. But he’s repeatedly run into complications, including a refusal by the board he chairs to disclose information it regarded as confidential. By that time, the board had accepted one of his offers. But rather than divulge inside stuff about the company’s dealings with lenders, the directors changed their mind in January 2009 and told Fertitta the deal was off.
Throughout the gyrations, the crafty suitor was buying shares on the open market. The combination of those purchases and the slide in restaurant stock prices have enabled him to trim his bid to $14.75 a share, compared with the $23.50 he’d originally offered back in January 2008.
Fertitta also bought a sizeable minority stake in McCormick & Schmick’s, a competitor to Landry’s namesake brand.
Today brought news that two of Chicago’s fine-dining pioneers will be firing down their stoves for the last time. Nick’s Fishmarket, a fixture of the Loop for more than 30 years, couldn’t survive the times. Owner Lee Suckow told the Chicago Sun-Times that business was off 30% from a year ago.
Even longer in the tooth was Don Roth’s Blackhawk, in the suburb of Wheeling. Don Roth, who opened the landmark in 1969, had been the Wolfgang Puck of his time, imbuing the place with a showmanship that made it the place to copy. Roth’s widow, Ann, is still involved in the business at age 90.
In announcing the restaurant’s closing, she noted that none of their children are interested in taking control of the business.
The restaurant will serve its last prime rib on New Year’s Eve.
Smith will succeed Bill Allen, who will continue as chairman after his retirement from the corner office on Nov. 15. Allen is one of the gems of the business, so its fortunate he’ll still be involved, albeit somewhat at arm’s length.
Fertitta, the company’s founder and CEO, already owned 55% of Landry’s stock, so you’d think it would have been a cakewalk. But he’s repeatedly run into complications, including a refusal by the board he chairs to disclose information it regarded as confidential. By that time, the board had accepted one of his offers. But rather than divulge inside stuff about the company’s dealings with lenders, the directors changed their mind in January 2009 and told Fertitta the deal was off.
Throughout the gyrations, the crafty suitor was buying shares on the open market. The combination of those purchases and the slide in restaurant stock prices have enabled him to trim his bid to $14.75 a share, compared with the $23.50 he’d originally offered back in January 2008.
Fertitta also bought a sizeable minority stake in McCormick & Schmick’s, a competitor to Landry’s namesake brand.
Even longer in the tooth was Don Roth’s Blackhawk, in the suburb of Wheeling. Don Roth, who opened the landmark in 1969, had been the Wolfgang Puck of his time, imbuing the place with a showmanship that made it the place to copy. Roth’s widow, Ann, is still involved in the business at age 90.
In announcing the restaurant’s closing, she noted that none of their children are interested in taking control of the business.
The restaurant will serve its last prime rib on New Year’s Eve.
Tuesday, February 10, 2009
List cites restaurant companies among the near-dead
Six SeekingAlpha.com contributors have collaborated on what amounts to a dead pool of consumer brands: “15 Companies That Might Not Survive 2009.” Regulars on the heavily trafficked site won’t be surprised to see Krispy Kreme on that critical list, given how much skepticism its turnaround efforts have met. Landry’s may not prompt a lot of visitors to fall out of their chairs, either. But Sbarro?
“It’s not the pizza that’s the problem,” writes lead author Rick Newman, whose day job is serving as chief business correspondent for U.S. News & World Report. Rather, he says, “many of this chain’s 1,100 storefronts are in malls, which is a double whammy.” A drop in retail traffic has thinned the eastern pizza specialist’s stream of potential customers, Newman explains. And without streetside facings, it can’t embrace some of the traffic draws that work for fast-food competitors, like snacks or breakfast.
The list is based on a review by Newman and his collaborators of Moody’s ratings of various bondholders, as well as unspecified other factors. The list was published on Sunday. Two days later, one of the cited companies is already flat-lining. Sirius XM, the subscription radio service, was reported today to be preparing for a bankruptcy filing.
Other familiar names on the death watch roster include Chrysler, Rite Aid, Blockbuster and Six Flags.
Of course, just publishing a list of companies you expect to go under can hasten the process. And no doubt some Old Media defenders will be citing the posting as a prime example of why blogging is the handiwork of Satan.
But there’s still the question of why the various companies cited haven’t posted comments challenging their designation of being not quite dead.
“It’s not the pizza that’s the problem,” writes lead author Rick Newman, whose day job is serving as chief business correspondent for U.S. News & World Report. Rather, he says, “many of this chain’s 1,100 storefronts are in malls, which is a double whammy.” A drop in retail traffic has thinned the eastern pizza specialist’s stream of potential customers, Newman explains. And without streetside facings, it can’t embrace some of the traffic draws that work for fast-food competitors, like snacks or breakfast.
The list is based on a review by Newman and his collaborators of Moody’s ratings of various bondholders, as well as unspecified other factors. The list was published on Sunday. Two days later, one of the cited companies is already flat-lining. Sirius XM, the subscription radio service, was reported today to be preparing for a bankruptcy filing.
Other familiar names on the death watch roster include Chrysler, Rite Aid, Blockbuster and Six Flags.
Of course, just publishing a list of companies you expect to go under can hasten the process. And no doubt some Old Media defenders will be citing the posting as a prime example of why blogging is the handiwork of Satan.
But there’s still the question of why the various companies cited haven’t posted comments challenging their designation of being not quite dead.
Monday, January 12, 2009
No mas! No mas!
The business week is barely underway, but it's already shaping up to be a stinker. The early bad news includes the bombshell that Landry's is backing out of a long-awaited buyout by founder and CEO Tilman Fertitta because the backers don't want details of the financing arrangement revealed to shareholders, as the SEC is demanding. Then there's Ruth's Chris' disclosure that fourth-quarter same-store sales dropped 18.5%. And, just to put that last smiley face on the morning's restaurant headlines, there's a full-fledged food-safety crisis involving peanut butter sold by one supplier to foodservice operators in at least 42 states.
The Landry's situation is by the far the real startler. The deal has had more ups and downs than a roller coaster at one of the company's amusement complexes. Now, with the going-private process in the home stretch, the buyout is called off, for reasons that are murky at best.
As an announcement cryptically recounts, the SEC ordered that the terms between buyer, seller and the deal's financial backers be released to shareholders. Landry's said it informed the agency that the agreements prohibit the disclosure of that proprietary information. The SEC responded in essence with, "Too bad. Tell your shareholders all the specifics."
If Landry's decided to comply with the SEC's directive, the funding might've been pulled in retribution. But, even worse for the company, the lenders could back out of a stipulation that they refinance $400 million in notes. Landry's would lose its suitor and a chance to lighten a crippling debt burden. The most responsible choice, the company argued in a press release, was to terminate the buyout. That way it wouldn't have to issue a proxy to shareholders. The disclosures demanded by the SEC would not have be made, the financiers would be appeased, and the refinancing could continue.
The big mystery, of course, is what the lenders--several Jefferies & Co. and Wells Fargo affiliates--did not want revealed. Barring a new John Grisham novel, we may never find out.
Perhaps Fertitta should shift his attention to buying out Ruth's Chris instead.
The Landry's situation is by the far the real startler. The deal has had more ups and downs than a roller coaster at one of the company's amusement complexes. Now, with the going-private process in the home stretch, the buyout is called off, for reasons that are murky at best.
As an announcement cryptically recounts, the SEC ordered that the terms between buyer, seller and the deal's financial backers be released to shareholders. Landry's said it informed the agency that the agreements prohibit the disclosure of that proprietary information. The SEC responded in essence with, "Too bad. Tell your shareholders all the specifics."
If Landry's decided to comply with the SEC's directive, the funding might've been pulled in retribution. But, even worse for the company, the lenders could back out of a stipulation that they refinance $400 million in notes. Landry's would lose its suitor and a chance to lighten a crippling debt burden. The most responsible choice, the company argued in a press release, was to terminate the buyout. That way it wouldn't have to issue a proxy to shareholders. The disclosures demanded by the SEC would not have be made, the financiers would be appeased, and the refinancing could continue.
The big mystery, of course, is what the lenders--several Jefferies & Co. and Wells Fargo affiliates--did not want revealed. Barring a new John Grisham novel, we may never find out.
Perhaps Fertitta should shift his attention to buying out Ruth's Chris instead.
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