Max & Erma's shares soar on $10.2M buyout deal

Shares of Max & Erma's Restaurants Inc. soared Monday after the company said it agreed to be bought out by private-equity company G&R Acquisition Inc. for about $10.2 million.

Shares jumped 86 cents, or 29.5 percent, to close at $3.78.

Earlier in the day, the company said G&R will buy all the outstanding shares of the company for $4 per share in cash. The price is a 37 percent premium to Max & Erma's closing price of $2.92 Friday. The total purchase prices is based on 2.6 million shares outstanding.

The company has been exploring strategic alternatives, including a sale.

The deal comes after Max & Erma's reported a loss in its first quarter, at least partly from a drop in sales at locations open at least a year.

Same-store sales, a key indicator of restaurant performance, fell 4.5 percent. The company blamed the dip mainly on the slumps in the housing and auto markets in the Midwest, home to most of the chain's restaurants.

Max & Erma's has also struggled to keep its listing on the Nasdaq. The company received a notice in February from the exchange saying it has not maintained a minimum value of shareholders equity of $10 million, which is required for listing on the Nasdaq.

G&R President Gary Reinert Sr. said G&R will help "solve the company's liquidity and capital issues and allow the company to effectuate its turnaround plan."

Max & Erma's said its current management team will remain in place following the transaction. The board of directors of both companies have already approved the deal, and Max & Erma's principal shareholders have agreed to vote for it.

Max & Erma's operates 79 casual-dining locations.