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Landry's Salivates for Smith & Wollensky

Oh, so now everybody wants Smith & Wollensky (Nasdaq: SWRG  ) .

Landry's Restaurants (NYSE: LNY  ) is offering shareholders of the upscale chophouse $9.75 a share in cash this morning. This comes after its original $7.50 unsolicited offer back in January was topped two weeks later by a $9.25 offer from privately held Patina, a bid the steakhouse accepted.

Just like that, Smith & Wollensky has become the belle of the butcher-block ball.

It's an amazing tale of redemption, humility, and some really big porterhouse steaks. Until gentleman callers began lining up two months ago, the classy eatery found itself toiling away in anonymity for years since going public at $8.50 back in 2001. The stock never traded above that IPO price until Patina's offer in late January.

Why was Smith & Wollensky doomed to a life of single-digit share prices, while recent chophouse rivals like Morton's (NYSE: MRT  ) and Ruth's Chris (Nasdaq: RUTH  ) have been better-received? The key is the blood-rare income statements. Profitability has been scarce and temporary for Smith & Wollensky. It has always managed to pack crowds in and grow its comps, but those sales have proved dicey on the way to the bottom line.

Landry's and Patina obviously think they can change that. It's easier to take a popular concept and make it profitable than to try to salvage a tarnished brand. The Smith & Wollensky brand is still strong. Whoever comes out on top -- as long as this bidding war doesn't spiral too much higher -- will have a wonderful opportunity here. This deal follows recent buyouts in the casual-steakhouse space including Lone Star Steakhouse, Outback parent OSI (NYSE: OSI  ) , and CBRL's (Nasdaq: CBRL  ) Logan's Roadhouse.

So who will come out on top? Good question. The first Landry's deal was unsolicited. The Patina offer was accepted. Smith & Wollensky may decide to stick with Patina despite Landry's slightly higher cash offer, but there's always a chance that Patina does the right thing by upping the ante.

Wouldn't it be sweet if Smith & Wollensky finally got bought out at $10 or better? Shareholders have no idea what double digits look like -- at least, not until they check out the appetizer menu prices.

Digest wisely, Smith & Wollensky.

Still hungry for more? Check out our own version of a dessert menu:

  • Landry's loves Smith & Wollenksy.
  • Oh, but Patina loves it more.
  • I can argue that I was there before them -- with the John Cusack boombox over my head blaring out Peter Gabriel -- but November feels so long ago.

OSI Restaurant Partners is an Inside Value stock selection. You've got 30 days to check out the service for free -- so don't let your steaks go cold.

Longtime Fool contributor Rick Munarriz has a Smith & Wollensky just a few miles from his home. Maybe he'll go out there to celebrate this weekend. He does own shares in CBRL Group. He is part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.

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