Waving an olive branch this time, activist investor Vintage Capital has resubmitted its offer to buy Red Robin Gourmet Burgers for $40 per share in cash for the 88% of the company it doesn’t already own.
Red Robin said in a statement that it would consider what it called a "proposal."
In a letter sent to Red Robin Chairman and acting CEO Pattye Moore, Vintage Managing Partner Brian Kahn sounded far friendlier than he had in previous communications, where he’d bashed Moore and her team for their handling of such matters as finding a new CEO. “We are pleased we have begun a constructive dialogue,” wrote Kahn, as indicated in a copy filed with the Securities and Exchange Commission. “We hope that this dialogue continues.”
Kahn proposed that Vintage form a new entity that would then merge with Red Robin. In a marked change in tone from past letters, he stated, “We believe the company is well-positioned for future growth, and we believe that many members of the company’s existing management are critical partners in the future success of the business.”
Vintage would meet with each retained senior member of the senior team to discuss “future roles and responsibilities,” Kahn wrote.
In Vintage’s prior letter, the company urged Moore and her team to either accept the $40-a-share offer or face a challenge by the investment firm for control of four of Red Robin’s nine board seats.
The communication noted that the offer is nonbinding. But it also pointed out that considerable due diligence has already been completed. The rest of the pre-sale work could be wrapped up in four weeks, and Vintage expects nothing out of the ordinary in pursuing the deal, Kahn said.
The $40-per-share offer exceeds the price of Red Robin’s stock on the day Vintage first offered that amount by 57%. The offer would value Red Robin, the franchisor and operator of about 562 full-service restaurants, at about $519 million.
Red Robin acknowledged receipt of the offer. "Consistent with its fiduciary duties and in consultation with its independent legal and financial advisors, the Red Robin board will carefully review and consider the proposal," read a statement from the company.