Landry's Restaurants OKs $1.2B acquisition offer

By MICHELLE CHAPMAN AP Business Writer

HOUSTON (AP) - The chairman and CEO of Landry's Restaurants Inc. finally got what he was after Tuesday, as the restaurant owner's board approved his $1.2 billion all-cash offer to take the company private.

The news sent shares of Landry's, which owns the Rainforest Cafe chain and other restaurants, surging $2.99, or 27.8 percent, to $13.75 in midday trading. The stock hit a fresh 52-week high of $13.99 earlier in the session.

Tilman J. Fertitta, who also serves as the company's president, already controlled more than half of Landry's shares. But coming up with the right formula to woo Landry's for its remaining stake took a while.

Under the deal Landry's board just approved, Fertitta's company will pay $14.75 per share in cash for Landry's stock it doesn't already own - a 37 percent premium over Landry's Monday closing stock price of $10.76. Fertitta's company owned about 55.1 percent of Landry's outstanding shares as of Monday.

But the offer is not Fertitta's first. An earlier bid, submitted in August, would have been a going-private transaction whereby Landry's stockholders would have received shares of Landry's Saltgrass Inc. in exchange for the Landry's shares they owned. The proposal was rejected by Landry's, which called it inadequate.

Fertitta launched a similar privatization bid in 2008, offering $13.50 per share. He shelved that offer last winter when a conflict arose with the Securities and Exchange Commission and lenders about disclosing terms the lenders insisted were confidential.

But Landry's was still open to proposals after nixing Fertitta's August offer, forming a special committee of directors the following month to review its strategic options, including a potential sale. The special committee unanimously recommended Fertitta's all-cash bid.

Fertitta's new proposal announced on Tuesday was more appealing to the company and its shareholders because it is an all-cash transaction. The transaction also includes a provision that allows Landry's to continue to solicit other acquisition offers until Dec. 17 or when the company's debt refinancing is complete, whichever is later.

If Landry's accepts a superior offer during this time, it would have to pay Fertitta's company a $2.4 million breakup fee.

The acquisition has received board approval, but still needs approval from Landry's shareholders and is subject to the company refinancing part of its debt. The deal is targeted to close in the first half of 2010.

Fertitta has a long history with Landry's, serving as a partner in the first Landry's Seafood House Restaurant that opened in Katy, Texas in 1980. Landry's expanded its operations and Fertitta took the company public on Aug. 19, 1993, according to Landry's Web site.

Landry's, the nation's second-largest operator of seafood restaurants behind Red Lobster owner Darden Restaurants Inc., also owns Charley's Crab, Landry's Seafood House and The Chart House. Its non-seafood restaurants include Vic & Anthony's and the Pizza Oven. The company has a gambling subsidiary that owns Golden Nugget casinos in Las Vegas and Laughlin, Nev., and it also owns several hotels around the U.S.