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Ark Restaurants Rejects Landry's Bid

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On Friday, Ark Restaurants (NASDAQ: ARKR  ) rejected the unsolicited takeover bid it received from Landry's two weeks ago.

Landry's is the owner of restaurant chains including Rainforest Cafe, Bubba Gump Shrimp Co., and McCormick & Schmick's. On Feb. 8, Landry's offered to buy all outstanding Ark Restaurants stock for $22 cash per share.

Ark, however, "after careful consideration," has determined that this bid is "inadequate." Chairman and Chief Executive Officer Michael Weinstein said in a statement: "The board believes that the proposal by Landry's significantly undervalues the company and its future prospects. In the board's judgment, Ark's shareholders will be better served by our experienced management operating and growing our business."

The $22 offer works out to only a 2.7% premium to Ark's current $21.42 share price. Ark itself pays shareholders a 4.7% dividend yield annually.


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  • Report this Comment On May 01, 2013, at 11:04 AM, JudasTouch wrote:

    Rich,

    You state "[t}he $22 offer works out to only a 2.7% premium to Ark's current $21.42 share price. Ark itself pays shareholders a 4.7% dividend yield annually."

    To be fair, a better comparison would be to the average trading price before Landry's made the offer. A quick glance at the chart tells me that, for the year prior to the offer, that's probably around $15, representing about a 45% premium. And at $15, the stock was yielding around 6.7% in dividends.

    Interesting the stock price didn't plummet back to pre-offer levels after this rejection. I wonder if the market is paying more attention, or if consensus is that a deal can be worked out.

    Appreciate your coverage of this former Tiny Gem.

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Rich Smith
TMFDitty

As a defense writer for The Motley Fool, I focus on defense and aerospace stocks. My job? Every day of the week, I'm monitoring the news, figuring out the winners and losers, and tracking down the promising companies for you to invest in. Follow me on Twitter or Facebook for the most important developments in defense & aerospace, and other great stories.

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