Red Robin Gourmet Burgers, Inc. (NASDAQ: RRGB) stock was among the biggest gainers on Thursday.
Shares of the company skyrocketed in the regular trading session following news that Vintage Capital, which controls about 1.5 million shares, or 11.5% of RRGB stock, has offered to buy the other 88% for $461.4 million, or $40 per in an all-cash transaction.
In a letter sent to the board of Red Robin, Vintage Capital said that the Colorado-based company should immediately commence a comprehensive review of strategic alternatives.
“Our sincere hope, as explained to members of the Board on a number of occasions, was to work collaboratively to recruit an “A+” operator to accept the CEO role and lead Red Robin back to greatness. It is clear that many such quality candidates are refusing to entertain the opportunity due to a lack of confidence in the Board’s leadership and Red Robin’s disastrous operating and market performance,” Vintage Capital said.
“Subject to confirmatory due diligence, we would be prepared to bid $40.00 per share in the auction process to acquire 100% of the company in an all-cash transaction,” the activist investor added. The $40 a share that the activist investor is offering Red Robin, represents a premium of 57% over RRGB price as of Wednesday’s close.
However, if Red Robin enacts the shareholder rights plan it adopted earlier this month, the aggregate price of purchasing all outstanding shares would rise to more than $461.4 million. The plan is known as a poison pill, and is aimed at protecting Red Robin from a hostile takeover.
Shares of Red Robin have lost more than 51% of their value in the last 12 months, as profitability and sales challenges continue growing. The company has been in the process of recruiting a new chief executive officer following the retirement of Denny Marie Post two months ago.
In premarket trading hours on Thursday, the shares rocketed 26.6% to trade $32.25. As of 11:45 a.m. ET, the stock was up $6.90, or 27.10% to $32.36 a share.
Red Robin Gourmet Burgers Inc Profile
Red Robin Gourmet Burgers Inc is a restaurant operator. The company develops, operates, and franchises casual-dining restaurants and fast-casual restaurants in North America.
Its brands are Red Robin, Red Robin Gourmet Burgers, Red Robin America’s Gourmet Burgers and Spirits, Red Robin Burger Works, YUMMM, Red Robin Gourmet Burgers and Brews, and Red Robin Royalty names and logos.
The company’s revenue consists of sales from restaurant operations, gift card breakage, franchise royalties and fees, and other miscellaneous revenue.