Smith & Wollensky
Shareholders already benefited from a bidding war when Bunker Hill, a private-equity firm, went up against Landry's Restaurants
Given the weak results, it was an opportune time to sell. Pro forma results were breakeven this year -- taking out costs related to the proposed merger and a writedown of renovated restaurant assets -- versus last year's earnings of $0.02, which itself excludes an insurance gain. The weakness is also evident in the 1.5% decrease in comparable restaurant sales.
The buyout deal looks fair to me. It offers investors more than double the stock price at the start of the year. Not bad, considering how this stock languished for years. It never did break above its $8.50 IPO price, which was way back in 2001. Profitability has been elusive, and when it did stop on for a quick bite, it was fleeting. Name recognition and customer traffic never seemed to flow to the bottom line.
Bunker Hill may very well be able to turn around the operation. But it will take time and money. For those still hanging on to the stock, at a price of $10.89, let the arbs have the $0.11. I'd advise moving on to the next table.
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Fool contributor Larry Rothman is happy to receive feedback, and he promises to read it when he's not being wrestled by his three children. Feel free to email him at email@example.com. He doesn't have any positions in the companies mentioned.