CARPINTERIA Calif. The parent of Carl’s Jr. and Hardee’s said Wednesday it has received a rival takeover bid that may be a better deal than the buyout offer put forth in February by Thomas H. Lee Partners.
CKE Restaurants Inc. did not identify who made the alternative takeover proposal to acquire all outstanding shares of the company. The board, however, said the new offer is “reasonably expected” to lead to a more “superior proposal” than the $928 million bid from private-equity firm Thomas H. Lee Partners LP. That offer included the assumption of $309 million in debt and a per-share cash price of $11.05.
CKE has until April 27 to consider the new offer and to allow the bidder to complete due diligence. The offer did not include evidence of a committed financing, the company said in a statement, and could be terminated at any time.
Shares in CKE rose more than 6 percent Wednesday on the news of the latest buyout offer, closing at $11.78.
CKE's board said it continues to recommend the pending merger with THL Partners. The new bid came in before Tuesday, the end of the “go shop” period for THL Partners’ proposal, during which CKE was allowed to consider competing offers. A shareholder vote is reportedly expected in late April.
Some of CKE's shareholders have questioned whether THL's offer was too low. In a letter sent earlier this week to CKE, shareholder Porter Orlin LLC, a New York investment firm, expressed "extreme dissatisfaction and puzzlement" over the bid.
"Selling the company at this time, under present market conditions virtually ensures that shareholders will not realize the true value of their investment," Porter Orlin said in its letter. "This deal strikes us as an opportunistic action by management to take the company from shareholders at the cheapest price possible, depriving us of the opportunity to participate in the future growth of this franchise."
Both of CKE's fast-food brands, which specialize in premium burgers, struggled over the past year with falling sales as consumers cut spending and rival chains turned to deep discounts. In its fourth quarter ended Jan. 31, CKE said same-store sales dropped 8.7 percent at Carl’s Jr. company-owned stores and declined 2.5 percent at Hardee’s.
In March, however, Hardee’s corporate-unit same-store sales turned positive with a 0.5 percent increase, though corporate units for Carl’s Jr. reported a decline of 7.6 percent, which officials blamed on the brand’s locations in economically hard-hit California. CKE operates, licenses or franchises 1,224 Carl’s Jr. and 1,905 Hardee’s locations in 42 states and 16 countries.
Activist investor Nelson Peltz, non-executive chairman of Arby’s/Wendy’s Group, was reportedly interested in CKE Restaurants, but later decided not to make a bid on the Carpinteria, Calif.-based company.
Contact Lisa Jennings at [email protected].
