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P.F. Chang's sells to Centerbridge for $1.1B

P.F. Chang's sells to Centerbridge for $1.1B

P.F. Chang's China Bistro Inc. said Tuesday that it has agreed to go private in a $1.1 billion deal with equity firm Centerbridge Partners L.P. of New York.

Scottsdale, Ariz.-based P.F. Chang’s said Centerbridge, which bought Rock Bottom Restaurants and Gordon Biersch Brewery Restaurant Group in November 2010, had agreed to acquire its stock for $51.50 a share, above the $40.79 its nearly 21.2 million shares had closed at on Monday.

In addition, P.F. Chang’s reported profit in the first quarter, ended April 1, fell to $6.3 million, or 30 cents a share, from $10.6 million, or 46 cents a share, in the prior-year period. Revenues were up 0.5 percent in the quarter, to $318.9 million from $317.4 million.

Rick Federico, chairman and chief executive of P.F. Chang's, said: “We are confident that being a private company will provide us with greater flexibility to focus on our long-term strategic plan of elevating our guest experience, enhancing our value proposition, growing traffic and improving the performance of our brands.”

Jason Mozingo, senior managing director of Centerbridge, said: “We have great respect for P.F. Chang’s, its brands, and the company's strong commitment to its customers, employees, and partners.”

P.F. Chang’s, which canceled its scheduled investor call Tuesday after announcing it was going private, said same-store sales decreased 0.6 percent at the Bistro and 1.7 percent at Pei Wei in the first quarter because of declines in traffic. Same-store sales trends at the Bistro were up 0.7 percent in January, nearly flat at 0.1 percent in February and down 2.8 percent in March, the company said. Trends at the fast-casual Pei Wei were down 1.4 percent in January, down 3.3 percent in February and down 0.5 percent in March.

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Stephan Anderson, senior restaurant analyst with Miller Tabac + Co. LLC, said in a research note: “PFCB’s turnaround story continued in fits and starts in [the first quarter] and appeared to have a setback in March amid broader industrywide softness in full-service dining.”

P.F. Chang’s said it would solicit competing offers through May 31, but David E. Tarantino of R.W. Baird said in a research note: “We think the probability of a competing bid emerging is relatively low given that implied valuation is above the average for recent restaurant buyouts and given that PFCB's operating results have continued to lag those of casual-dining peers.”

Anderson added: “Although we do not anticipate any other potential suitors now, we think any potential buyer will pave the way for greater cost scrutiny, potential closures of underperforming units and a more rapid turnaround.”

The company said Goldman, Sachs & Co. is serving as exclusive financial advisor and DLA Piper LLP is serving as legal advisor in the transaction. Wells Fargo Securities LLC and Deutsche Bank Securities Inc. are serving as financial advisors to Centerbridge, and Weil, Gotshal & Manges LLP is serving as Centerbridge's legal adviser.

P.F. Chang’s owns and operates 204 casual-dining P.F. Chang’s Bistros and the 170-unit Pei Wei Asian Diner and Asian Market, and is in the process of buying a majority position in the four-unit True Food Kitchen from Fox Restaurant Group, also of Scottsdale.

Contact Ron Ruggless at [email protected].
Follow him on Twitter: @RonRuggless

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