Fertitta plans to take over McCormick & Schmick’s

By

Steven Hedlund

Published on
April 3, 2011

Tilman J. Fertitta, who last year took Landry’s Restaurants private, is now trying to acquire a 100 percent interest in McCormick & Schmick’s Seafood Restaurants; the chairman, president and CEO of Houston-based Landry’s is already one of the seafood chain’s largest shareholders, owning a 10.1 percent stake in the Portland, Ore.-based company.

On Monday, Fertitta announced that he intends, through his affiliate LSRI Holdings, a subsidiary of Landry’s, to make an all-cash tender offer to buy McCormick & Schmick’s for USD 9.25 per share.

Fertitta said the offer will represent an “attractive” premium of approximately 30 percent to the closing price of McCormick & Schmick’s shares on Friday.

“We believe the offer represents a unique opportunity for McCormick & Schmick’s stockholders to realize the value of their shares at a significant premium to current and recent stock price,” he said.

Fertitta added that he is “fully committed” to pursuing the deal and has secured a financing commitment from Jefferies Group.

McCormick & Schmick’s currently operates 96 restaurants, including 89 units in the United States and seven units in Canada under The Boathouse banner. In February, the company — which reported lackluster fourth-quarter and year-end results, including a 4.9 percent drop in same-restaurant sales in 2010 — announced that it is investing USD 10 million to USD 15 million to modernize its restaurants.

“It’s a good name and they have lots of good locations, but they’ve been performing really poorly,” Fertitta told the Houston Chronicle. “We feel we can fix them. They fit into Landry’s very easily. The stores need to be updated.”

In a report on Monday, Paul Westra, a restaurant analyst with Cowen and Co., said he expects Fertitta’s offer to succeed because it makes sense from both a buyer’s and seller’s perspective. “Fertitta can add synergies by folding the chain into Landry’s portfolio of existing upscale seafood brands,” wrote Westra, “and the offer is attractive to shareholders because it is 30 percent above Friday’s closing price.”

Click here to read SeaFood Business Associate Editor James Wright’s profile of Fertitta, which appeared in the January issue of SeaFood Business magazine. 

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