U.S. burger chain Red Robin Gourmet Burgers Inc. has rejected an unsolicited conditional takeover offer from Florida-based private equity firm Vintage Capital Management LLC. The company said the proposal "undervalues Red Robin and is not in the best interests of all shareholders."
Vintage submitted the unsolicited proposal in July. It offered to purchase the remaining shares it does not already own in Red Robin for $40 each in cash for a total consideration of about $470 million.
Vintage Capital, which owns 11.57% of Red Robin, also approached the company in June with an offer to acquire 100% of the chain for $518.6 million in cash. At the time, Red Robin already had adopted a shareholder rights plan, colloquially called a "poison pill," that was meant to protect it "from any efforts to obtain control of the company."
Red Robin turned down the most recent bid, saying it was "conditional and contains uncertainty with respect to likelihood of completion."
The chain said it will continue working on its strategic plan to return the business to sustainable growth and profitability. This plan includes launching to-go and catering businesses, implementing digital platforms for the restaurant, and refranchising and reassessing its real estate portfolio.
"These initiatives are already delivering progress," Red Robin said, adding that the company reached its "strongest comparable restaurant revenue in five quarters" during the second quarter of 2019.
Evercore is acting as Red Robin’s financial adviser, while Paul Weiss Rifkind Wharton & Garrison LLP is serving as its legal counsel.
Separately, the company named Paul Murphy III as its new president and CEO, effective Oct. 3.
