Miami-based Benihana Inc. recently announced that it is being acquired by a private equity group Angelo, Gordon & Co.'s in a merger deal valued at around $296 million or $16.30 per share in cash. Execution of the deal will make Benihana private.
The offer price is at a 46% premium to the average closing share price for the 30-day period ended March 13, 2012 and at around 23% premium to the closing share price on May 21. On March 13, Benihana declared the evaluation of strategic alternatives which included a possible sale, in association with Jefferies & Co., in order to bolster shareholder value.
However, the completion of the deal is subject to regulatory as well as shareholders’ approvals and other customary closing conditions. Moreover, there will be a 40-day period where Benihana can consider if it gets any lucrative offer from any third party, running through July 1, 2012. The possibility of a higher bid however seems negligible as Benihana has been offered an attractive multiple.
Although Benihana’s growth in comps gained momentum in recent times, in its third-quarter 2012 results, Benihana’s earnings per share fell short of both the Zacks Consensus Estimates and the year-ago level. Benihana management appears to be content with the offered cash premium as it believes Angelo has justified the value of the Benihana brand.
This is not the first time that Benihana tried to sell itself. Earlier, in July 2010, Benihana had considered the possible sale option under its strategic alternatives review program. This leading Asian themed Japanese steak-and-sushi eatery, operates 95 units spread across three concepts namely Benihana restaurants, Haru sushi restaurants and RA Sushi restaurants. The distinctive concept as well as growing demand for quality Japanese dining made it a lucrative acquisition target.
If executed, we believe that after the deal Benihana will be handled well by its new owner Angelo Gordon's Private Equity Group. The group makes sizable investments in the range of $50-$500 million in sectors like financial services, consumer/retail, and healthcare.
In the recent times, merger and acquisition activity has gained momentum in the sector. The companies are looking at potential business partners to unlock value. Benihana is not the only restaurant to go private. One of its competitorsP.F. Chang’s China Bistro Inc. also recently agreed to be bought for $1.1 billion by Centerbridge Partners LP.