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Financing

Ruby Tuesday rejects a 2nd purchase offer

The company’s board says the higher offer from The Boaz Group was “highly conditional.”

Ruby Tuesday on Monday revealed that it has rejected a higher offer from a second suitor, saying that it was “highly conditional and not fully financed.”

The proposal, revealed in a federal securities filing, came from an investment firm, The Boaz Group, and would have paid Ruby Tuesday shareholders $2.88 a share for the company, 20% more than the $2.40 they are getting from the private-equity firm NRD Capital. That would have given shareholders another $30 million.

The Maryville, Tenn.-based casual-dining operator said in its filing that it gave Boaz “ample time” to secure its financing and reduce the conditions it requires for any proposal, but said that it has now rejected the investor’s offer to avoid any further delay of its sale to NRD.

The Ruby Tuesday board said that Boaz first contacted the company in March and has submitted “six highly conditional acquisition proposals, none of which contained committed financing.”

In August, Ruby Tuesday agreed to the offer from NRD, but afterward allowed Boaz to continue submitting offers, according to the filing. The company said the investment firm continued to submit proposals “that in each case lacked a credible financing plan.”

Ruby Tuesday said the latest offer is conditioned on further due diligence and has closing conditions that the NRD proposal does not.

“Having already provided Boaz with ample time and opportunity to produce an actionable and fully financed proposal, and Boaz repeatedly failing to do so, the board of directors has unanimously determined that the risk of delaying the acquisition by NRD Capital … significantly outweighs any benefit that may be achieved by further engagement with Boaz,” the company said in its filing.

Ruby Tuesday stock opened on Monday at slightly over NRD’s $2.40 purchase price, suggesting that some investors now believe the company will be sold for more than the amount NRD is paying. That deal is expected to close on Thursday, according to the filing.

Ruby Tuesday had been struggling for years before finally deciding earlier this year to put itself on the market. The company operates nearly 600 locations, down from 724 in August of 2016. Same-store sales have fallen for seven straight quarters, and 10 of the past 12, including a 5.8% decline in its most recent period.

The company’s same-store sales have been weak for over a decade amid a decline in the market for bar and grill chains. Various chief executives have struggled to reverse the trend.

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