Knobias Clip Report (04-05-2008)
Submitted By Knobias ClipReport
LNY: Receives Lowered $21 Offer from CEO; Engages Cowen
Friday’s session saw mixed results for the day but solid weekly gains as many investors brushed aside employment and other lackluster economic data to post profits.
The next catalyst is first quarter earnings which begin to trickle out next week with many expecting companies to lower forward guidance. If shares continue to see gains with lower earnings or guidance, the bottom may have already been made with fundamentalists leading the charge on a value stampede.
Another catalyst could be merger and acquisitions. Some fairly popular names have been involved in merger activity with others in proxy battles after share price erosion in an overall market pullback.
One Company that is seeing this type of activity is Landry Inc. (LNY). The Company is a restaurant, hospitality and entertainment company engaged in the ownership and operation of casual dining restaurants. Its portfolio of names includes: Landry’s Seafood House, The Crab House, Charley’s Crab and The Charthouse, as well as Saltgrass Steak House and Rainforest Cafe.
On Friday the Company announced that their CEO, Tilman Fertitta proposed an offer to the Company to acquire the stock for $21 a share. The bid, which is valued at $1.3 billion and is a 37% premium over Thursday’s closing price but is lower than Fertitta’s initial offer of $23.50 in January. The offer in January represented a 41% premium over the stock’s closing price of $16.67 prior to announcement of the acquisition.
Following the proposal in January, Landry’s established a special committee to review the proposal, as well as any alternative bids that may be received.
Obviously, Fertitta has tired from the waiting of on an answer on his proposal and displayed that by decreasing the offer to $21 a share. Also contributing to the lower price was a worsened credit environment which makes the ability to obtain the necessary financing doubtful.
But Fertitta, in his proposal, also included a note from the investment bank, Jefferies & Co. noting their confidence in Ferttita’s ability to complete the necessary financing.
Before the proposal announcement, Landry’s engaged Cowen and Company as its independent financial advisor. While taking this next step doesn’t necessarily mean the Company will agree to the proposal, it does mean they are taking it more serious than they did in January.
In any event, shares closed at $17.91 on Friday which is still a 17.25% discount to the proposed acquisition price of $21. With other names such as Yahoo! and Captaris who have also received buyout offers and have delayed or denied acceptance of terms, it would be interesting to see if the old nickname of Merger Mondays will again be appropriate in coming weeks even with the current credit environment. With that in mind, investors would be wise to watch.
Visit 1800blogger to see all of our industry leading blogs.
