NEW YORK Nelson Peltz, a well known activist investor and the non-executive chairman of Wendy’s/Arby’s Group, has reportedly decided not to pursue an acquisition of CKE Restaurants Inc., the New York Post reported Thursday.
Peltz was reportedly considering a rival bid for CKE, the parent of the Carl’s Jr. and Hardee’s quick-serve brands, which last month agreed to an acquisition agreement with private-equity firm Thomas H. Lee Partners for $928 million. The deal included the assumption of $309 million in debt and a per-share cash price of $11.05 per CKE share.
Under the terms of the deal, CKE had the right to shop around for better offers until April 6, and Peltz’s name quickly rose to the top of the list among industry observers.
The New York Post, using an unnamed source, reported that Peltz passed on the acquisition opportunity after conducting due diligence on CKE, which operates or franchises 1,224 Carl’s Jr. restaurants and 1,905 Hardee’s stores.
Earlier this week, CKE reported its fourth quarter and full year results, which showed an increase in profit despite still-negative sales trends.
For the fourth quarter ended Jan. 31, a $9.9 million tax benefit helped CKE post a profit of $15.4 million, or 28 cents per share, compared with $2.6 million, or 5 cents per share for the year-ago fourth quarter. Latest-quarter revenue fell 5 percent to $311.7 million.
Same-store sales declined 8.7 percent at Carl’s Jr. corporate units, and 2.5 percent at Hardee’s.
For the full year, net income rose about 30 percent to $48.2 million from $37 million at the end of fiscal 2009. Same-store sales at company stores were down 3.9 percent and revenues were down about 4 percent to $1.4 billion.
Andrew Puzder, CKE chief executive, said he was pleased that the two burger brands “maintained market share,” as well as holding to its philosophy of offering premium burgers to young, hungry guys, and maintaining profitability.
“We will stay on course as we enter fiscal 2011 with our focus on big, juicy premium burgers for hungry guys and as we grow our company stores and quickly expand our franchisee presence,” he said. “To grow same-store sales, we will continue with our aggressive new product launches, cutting edge advertising, dual branding and remodeling; all the while looking for ways to increase profitability.”
Contact Elissa Elan at [email protected] and Lisa Jennings at [email protected].