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.
“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.
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.”
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.
“We believe our offer price of USD 9.25 per share in cash would deliver substantial, immediate and highly certain value to [McCormick & Schmick’s] stockholders,” said Fertitta at the time. “The board’s initial response to our intended tender offer and its unwillingness to engage in mutually beneficial discussions for a negotiated transaction is not in the best interests of stockholders.”
But, after reviewing the offer for about a week, the McCormick & Schmick’s board turned it down, citing several reasons, including that the financing contingency would require the company to provide LSRI Holdings access to confidential information about the company’s operations, strategies and plans that could be used to its detriment.
