Stock up 12% Today $8.47
With the start of a consumer spending recovery and greater access to capital, private equity firms have lately been showing renewed interest in restaurant companies. Seven months ago, Rubio’s rejected an offer of an unsolicited buyout of $8 a share, a 33% premium to its then stock price. Mill Road Capital, L.P., a private investment firm based in Greenwich, Connecticut, has announced its desire to acquire Rubio’s Restaurants, Inc. The primary goal of Mill Road Capital is to directly own “a diversified group of businesses that generate cash and consistently earn above-average returns on capital”. Rubio’s, which operates more than 195 restaurants in California, Arizona, Colorado, Utah, and Nevada, has reported a first quarter profit of $367,000, or 4 cents a share; up from $245,000, or 2 cents a share, a year earlier. It currently owns about 5% of Rubio’s outstanding shares, the company said in a regulatory filing.
Mill Road’s offer is an all cash transaction valued at $8.70/share, representing a premium of about 14% to Rubio’s Friday closing price of $7.66. Ralph Rubio, founder and chairman of Rubio’s, Chief Executive Daniel Pittard, and private equity firm Rosewood Capital collectively own about 24% of the company’s outstanding shares. They have all committed to vote in favor of the proposed deal with Mill Road Capital. The transaction has been unanimously approved by Rubio’s board and the deal is expected to close during the third quarter of this year. Mill Road will acquire all of Rubio’s outstanding shares in this cash merger transaction, and the aggregate transaction value is approximately $91million. After the announcement of this takeover, Rubio’s shares rose 12% to a 2 year high of $8.60 in morning trading Monday in the NASDAQ.
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