* Offer at $8.70/shr
* Offer represents 14 pct premium to Rubio's Friday close
* Rubio's reports higher quarterly results
* Rubio's shares rise 12 pct
(Adds analyst comments, updates share movement)
By Renju Jose
BANGALORE, May 10 Mexican restaurant chain
Rubio's Restaurants Inc RUBO.O said it agreed to be acquired
by private equity firm Mill Road Capital LP for about $91
million in cash.
The offer of $8.70 a share represents a premium of about 14
percent to Rubio's Friday closing price of $7.66.
"I thought they would have gotten a better price, but they
spent over six months looking at strategic alternatives, so I
think they got the best deal that they could," B. Riley & Co
analyst Ian Corydon said.
Rubio's has been evaluating options since October, when it
rejected an unsolicited buyout offer of $8 a share -- a 33
percent premium to its then stock price -- from an investor
group consisting of Alex Meruelo and his affiliates and Levine
Leichtman Capital Partners IV LP. [ID:nBNG385436]
Private equity firms lately have been showing renewed
interest in restaurant companies, with the start of a consumer
spending recovery and greater access to capital.
CKE Restaurants Inc CKR.N, the owner of Hardee's and
Carl's Jr fast-food chains, agreed to be bought by Apollo
Management in April, and a source told Reuters in March that
RDG Capital had bid for Japanese-style restaurant chain
Benihana Inc BNHN.O.
Analyst Corydon said he believes Rubio's shareholders will
approve the deal with Mill Road, and he does not expect a bid
from another party, especially Meruelo.
"If (Meruelo) wanted to put in a higher bid, he would have
done it during the strategic alternative process period,"
Meruelo, a California-based real estate developer and
founder of the La Pizza Loca chain, controls 11.6 percent of
Rubio's outstanding shares, according to a filing with the U.S.
Securities and Exchange Commission in April.
Rubio's said its founder and Chairman Ralph Rubio, Chief
Executive Daniel Pittard and private equity firm Rosewood
Capital collectively own about 24 percent of the company's
outstanding shares, and have committed to vote in favor of the
proposed deal with Mill Road.
Greenwich, Connecticut-based Mill Road owns about 4.9
percent of Rubio's outstanding shares, the company said in a
The deal has been unanimously approved by its board and is
expected to close during the third quarter, Rubio's said.
The company -- which operates about 190 restaurants in
California, Arizona, Colorado, Utah and Nevada -- also 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.
Excluding items, it earned 5 cents a share.
Revenue rose 1 percent to $46.7 million for the quarter.
Restaurant operating margin rose to 16.6 percent, from 15.7
percent a year earlier.
Rubio's shares rose 12 percent to touch a two-year high of
$8.60 Monday on Nasdaq. They were trading up 84 cents at $8.50
in the afternoon session.
(Reporting by Renju Jose in Bangalore; Editing by Anne
Pallivathuckal and Don Sebastian)