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J. Alexander’s questions the seriousness of the Ancora offer

The casual-dining company “doubts” that the acquisition proposal was “bona fide.”
Photograph: Shutterstock

J. Alexander’s questioned the seriousness of a proposed acquisition offer from Ancora Advisors on Tuesday while saying that the $11.75-per-share price the investor offered “is nowhere near a full and fair value for the sale of our company.”

The Nashville casual-dining chain operator made the statements in a letter to shareholders in response to Ancora’s recommendation that the company’s shareholders withhold votes from two board members it says had conflicts of interest in a now-defunct merger deal last year.

“We view Ancora’s spurious proposal and open attack as a publicity attempt intended to bolster Ancora’s future fundraising, and line their pockets with fees,” J. Alexander’s said.

J. Alexander’s, which operates 46 units, including its flagship concept and Stoney River Steakhouse, finds itself in a battle with Ancora, one of the company’s largest shareholders and an owner of nearly 9% of the company’s stock.

The fight appears to be as much about a proposed merger with Ninety Nine Restaurants last year as it is about Ancora’s unsolicited purchase offer in April. Shareholders killed that proposal amid concerns that it would have handed over controlling shares to J. Alexander’s former owner, Fidelity National Financial.

Ancora wants votes withheld from directors Timothy Janszen, CEO of large J. Alexander’s shareholder Newport Global Advisors, and Ronald Maggard, citing conflicts of interest in that both were involved with Ninety Nine Restaurants before that merger.

J. Alexander’s called Ancora’s “persistent focus on our board’s independence” is “inappropriate.” The company noted that the board deliberately required the OK of “disinterested shareholders” for the deal to go down.

“When our disinterested shareholders chose not to approve the transaction, our board immediately terminated the transaction,” the company said.

J. Alexander’s argued that Ancora’s offer is too low, more than 12% lower than the company’s 52-week high and 22% lower than “the prevailing equity analyst price target” for the company.

The company said that it has invested in new restaurants and ended a costly consulting arrangement with Black Knight Management—which was controversial in that Black Knight is a subsidiary of Fidelity.

Ancora would “buy our company at a bargain price in order to reap the benefits” of those moves, the company said. That “would deprive long-term investors of a significant value realization opportunity.”

But J. Alexander’s also doubts the veracity of Ancora’s proposal, noting that it lacks details on financing, and “at no time, including during subsequent engagements with J. Alexander’s management, has Ancora attempted to construct a more credible proposal.”

The company noted that federal regulators fined the firm for providing investment advisory firms to Ohio public pensions while making campaign contributions to candidates there.

“We do not believe that Ancora’s proposal is serious, we also do not believe that Ancora should have the opportunity to rob shareholders of realizing the long-term value of their investment in our company,” J. Alexander’s said.

It noted that the company’s operations, financial results and outlook are “positive.” Same-store sales at J. Alexander’s have been up for 11 straight quarters, while Stoney River’s same-store sales have been up for nine quarters.

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