The board of McCormick & Schmick’s Seafood Restaurants on Wednesday unanimously rejected an unsolicited buyout offer from shareholder Tilman Fertitta. Doug Schmick, chairman of the Portland, Ore.-based company, said the USD 137.2 million bid “undervalues” the upscale seafood chain. Then on Friday, Fertitta, chairman, president and CEO of Houston-based Landry’s Restaurant, extended the offer until 31 May.
On Thursday, Fertitta had accused the McCormick & Schmick’s board of failing to act in shareholders’ best interests.
“We were extremely disappointed to learn that the board of directors has chosen to not only reject our offer, but has also adopted a ‘poison pill’ rights plan in reaction to our tender offer rather than respond to our request to negotiate a merger agreement,” said Fertitta. “We do not believe that these actions are in the best interests of [McCormick & Schmick’s] stockholders, and we question whether the directors are properly exercising their fiduciary duties to stockholders. It appears to us they may be acting in their own self interest.”
Fertitta said he “seriously” questions the board’s ability to significantly improve McCormick & Schmick’s operating results. He urged shareholders to withhold their vote at McCormick & Schmick’s upcoming annual meeting.
McCormick & Schmick’s — which reported lackluster fourth-quarter and year-end results, including a 4.9 percent drop in same-restaurant sales in 2010 — plans to invest USD 10 million to USD 15 million to modernize its restaurants. Currently, the company operates 95 restaurants, including 88 units in the United States and seven units in Canada under The Boathouse banner.
Fertitta, chairman, president and CEO of Houston-based Landry’s Restaurant, made the bid official at the beginning of the month, noting that his offer represents a 30 percent premium over the closing price of McCormick & Schmick’s common stock on 1 April.
“The board believes that the LSRI Holdings offer undervalues the company, is highly conditional, opportunistically timed and seeks to advance the financial and competitive interests of LSRI Holdings [parent company of Landry’s Restaurants] at the expense of all other McCormick & Schmick’s stockholders,” said Schmick on Wednesday.
Added Bill Freeman, CEO of McCormick & Schmick’s: “The board and management remain confident that McCormick & Schmick’s is well-positioned to benefit from the recovery of the upscale casual-dining industry and that continued execution of the company’s strategic revitalization plan, announced in March 2011, will improve revenue per location, provide strong returns on invested capital and deliver significant value to all stockholders.”
