NEW YORK Patina Restaurant Group principals Nick Valenti and Joachim Splichal have teamed up with the private-equity firm Bunker Hill Capital L.P. to offer $90 million, or $11 per share, for steakhouse operator The Smith & Wollensky Restaurant Group Inc.
SWRG, which previously agreed to be acquired by Patina for $79.6 million, or $9.25 per share, recommended that shareholders approve the deal. Valenti and Splichal head up New York-based Patina, which operates a number of high-end restaurants on the east and west coasts.
The new offer is the latest in an escalating bidding war that began earlier this year when Landry's Restaurant Group of Houston offered to acquire the New York-based steakhouse company for $7.50 a share. Privately held Patina countered with its bid, which SWRG accepted. That offer would have allowed SWRG chief executive Alan Stillman to purchase certain of his company's New York properties and management contracts.
In April, however, Landry's raised its per-share bid to $9.75, saying it intended to keep the company's New York properties. "We believe that these assets are being sold to Mr. Stillman at a discount to their fair market value," Landry's said in a letter to the special committee formed by SWRG's board to explore a change in ownership. Landry's also said it would not enter into any severance agreements with SWRG's officers.
Landry's did not respond to requests for comment on the offer from Valenti, Splichal and Boston-based Bunker Hill, which owns Dedham, Mass.-based Papa Gino's Holdings Corp., parent of the Papa Gino's and D'Angelo Sandwich Shop chains. Valenti has a 10-year affiliation with Bunker and serves on its Executive Council, a panel of outside executives to whom the firm turns for advice and guidance. He also owns a stake in Papa Gino's Holdings.
Under terms of the new agreement, all rights and obligations under the original merger agreement between Patina and SWRG have been assigned to the consortium. As agreed upon in the deal with Patina, Stillman would acquire Park Avenue Café and Quality Meats in New York from SWRG and the management rights to the New York Smith & Wollensky, the Post House and Maloney & Porcelli.
Patina would manage the Smith & Wollensky properties, which are located in Miami Beach, Chicago, Las Vegas, Washington, D.C., Philadelphia, Columbus, Ohio, Houston and Boston. The company closed its Dallas outlet earlier this year.
Valenti said he was excited about acquiring the 30-year-old steakhouse brand and planned to begin expanding it shortly. "We've already begun to look for locations," he said. "And though we've had offers to open it overseas, we'll start here in the United States."
SWRG has posted a net loss for each of the last five years, most recently with a 2006 shortfall of $4.2 million. MarketWatch estimates its earnings before interest, taxes, depreciation and amortization, or EBITDA, at $9.2 million, and calculated its market capitalization at $95 million.
The transaction is expected to close during the third quarter of the calendar year.
Valenti formed Patina Restaurant Group last year with chef-founder Splichal and Tokyo-based foodservice conglomerate Shidax Corp., which is headed by Ken Shida. Patina was formed from elements of Restaurant Associations and Los Angeles-based Patina Group. The company, which includes all of the former RA restaurant holdings, several east Coast foodservice locations and all of Patina Group's West Coast restaurants and cultural-venue accounts, was acquired form London-based contract firm Compass PLC for about $90 million.
Valenti said the new deal to acquire SWRG has Shida's blessing.
