J. Alexander's JAX.O second-largest shareholder Privet Fund LP said Fidelity National Financial Inc's (FNF.N) offer to buy the restaurant operator for $12 per share in cash and stock undervalued the company.
On June 25, the U.S. property title insurer said it agreed to buy J. Alexander's in a $72 million deal and would merge it with its restaurant operating unit, American Blue Ribbon Holdings (ABRH), followed by a listing on the Nasdaq.
J. Alexander's shareholders were given an all-cash option or a combination of $3 in cash and one share of Class A common stock of ABRH.
The deal represented a 21 percent premium to J. Alexander's stock's close on June 22, but offered only a 6 percent economic interest in Fidelity's combined restaurant operations to J. Alexander's shareholders.
"We are mystified as to how this contemplated structure can possibly be of greater benefit than an all-cash bid," Privet's Ryan Levenson and Ben Rosenzweig said in a letter to the company's independent directors.
"No shareholder of J. Alexander's wants a nominal, secondary class interest in an accumulation of businesses that have minimal overlap with the company's growing market niche."
Privet has a roughly 10 percent stake in J. Alexander's.
Shares of J. Alexander's were trading up nearly 2 percent at $11.48 session on the Nasdaq.
(Reporting by Eileen Anupa Soreng in Bangalore; Editing by Anil D'Silva)