McCormick & Schmick's to be sold for $132 million
McCormick & Schmick's Seafood Restaurants of Portland has agreed to be acquired, giving in to a long-running campaign by the CEO of Houston-based Landry's Restaurants.
McCormick & Schmick's Seafood Restaurants of Portland has agreed to be acquired for $8.75 a share, or approximately $132 million, giving in to a long-running campaign by the CEO of Houston-based Landry's Restaurants.
McCormick & Schmick's operates 85 restaurants in the United States, including three in Seattle and one in Bellevue, along with seven in Canada.
Landry's ran about 175 locations including steakhouses, seafood restaurants and the Rainforest Café jungle-themed eateries, before it was taken private a year ago by CEO Tilman Fertitta.
Fertitta has since acquired the Bubba Gump Shrimp Co. and Claim Jumper chains. He also bought the Trump Marina Hotel and Casino in Atlantic City earlier this year to add to Landry's Golden Nugget brand resorts.
Last spring Landry's offered $9.25 a share for the Portland company and then threatened a proxy fight for control of its board. McCormick & Schmick's said at the time it would consider "strategic alternatives" including a sale.
McCormick & Schmick's shares closed up $1.86, or 27.5 percent, at $8.63 Tuesday; the deal was announced before the market opened.
Landry's will begin a tender offer to buy all McCormick & Schmick's shares within 10 days. Fertitta owned about 10.1 percent of the chain and was the largest shareholder as of July 14, according to data compiled by Bloomberg.
McCormick & Schmick's has "great locations across America," Fertitta, 54, said in a telephone interview. "We can go in and update them and make them feel a little more like today, and not yesterday."
McCormick & Schmick's CEO Bill Freeman announced a plan earlier this year to remodel restaurants and tailor the brand to local tastes amid revenue declines in 11 of the last 12 quarters.
Landry's offer values McCormick & Schmick's at 8.04 times earnings before interest, taxes, depreciation and amortization. That's less than the 8.28 times median multiple for 60 pending or completed U.S. restaurant takeovers announced in the past five years, according to data compiled by Bloomberg.
McCormick & Schmick's has struggled in recent years, and it lost money in each of the past four quarters. Its revenue fell 4.2 percent to $81.4 million in the quarter ended Sept. 28 as comparable-restaurant sales declined 1 percent. The company had a net loss of $2.51 million, or 17 cents a share, in the third quarter, compared with profit of $1.04 million, or 7 cents, last year.
The dining chain withdrew its previous full-year profit and sales forecasts yesterday when it reported earnings.
The first McCormick & Schmick's eatery opened in 1979 in Portland, according to its website. The chain sells fish and steaks along with locally sourced vegetables and herbs.
"The chefs have a lot of autonomy to do regional stuff on their menus," Fertitta said. "Their food has tremendously improved over the last several years."
Bloomberg News contributed to this report.
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