Red Robin buyout speculation escalatesRed Robin buyout speculation escalates

Lisa Jennings

Officials with Red Robin Gourmet Burgers Inc. said they could not comment on press reports last week that the company is in talks with possible bidders.

According to Bloomberg News, the newsletter Deal Reporter cited unidentified sources saying Red Robin is exploring alternatives including a possible sale, and that management has met with at least two parties.

Securities analysts have pointed to the 440-unit casual-dining chain as a buyout target in recent months, and adding fuel to the speculation was the disclosure last week that activist investor Sardar Biglari held a 6-percent stake in Red Robin. Biglari is the chairman and chief executive of San Antonio-based Biglari Holdings Inc., which operates the Steak N’ Shake and Western Sizzlin’ chains. He also is a well-known restaurant investor who has played roles in deals at Friendly Ice Cream Corp. and during the Applebee’s-IHOP merger. Biglari’s 6-percent stake in Red Robin was filed as a passive investment.

The Greenwood Village, Colo.-based Red Robin sent an e-mail to Nation’s Restaurant News on Saturday offering no comment.

Shares of Red Robin rose 2.2 percent Monday to close at $20.38 per share, which is a 16- percent increase from its July 1 close, the day prior to Biglari’s filing. During the past 52 weeks, Red Robin shares have traded between $14.39 and $29.10 per share.

The potential buyout news follows an agreement made earlier this year with another group of investors, including Clinton Group Inc. and Spotlight Advisors LLC, which included a search for a new chief executive. On Monday, that investor group reported they had increased their ownership stake in Red Robin to about 7 percent collectively.

According to filings Monday with the U.S. Securities & Exchange Commission by Clinton Group and Spotlight Advisors, Clinton Group increased its ownership stake in Red Robin from about 6.1 percent to 7.12 percent, while Spotlight continued to control less than 0.1 percent of the foodservice operator’s voting stock.

Earlier this year, Clinton and Spotlight came to an agreement with Red Robin that the company would search for a new chief executive to replace Dennis Mullen, as well as add three board members — industry veterans Robert Aiken, the former president and chief executive of U.S. Foodservice; Lloyd Hill, the former chair and chief executive of Applebee’s International Inc.; and Stuart Oran, managing member of merchant bank Roxbury Capital Group.

According to SEC filings, Clinton Group and Spotlight spoke with board chairwoman Pattye Moore and Aiken about “the role and responsibility of the board in the event the company receives a buyout proposal,” among other things.

Contact Lisa Jennings at [email protected].