Del Frisco’s Restaurant Community Inc.’s board adopted a shareholder rights blueprint Wednesday as activist investor Engaged Capital LLC pressed for the sale of all or phase of the corporate.
Newport Beach, Calif.-basically based Engaged, which owns 9.9 p.c of Del Frisco’s shares, sent a letter to the parent of Del Frisco’s Double Eagle Steakhouse and other producers Thursday, urging open air shareholder illustration on the board and the formation of a committee to compare a sale. The company moreover owns the Del Frisco’s Grille, Barcelona Wine Bar and Bartaco ideas
“Given DFRG’s short- and long-interval of time underperformance, checkered operational execution and excessive monetary leverage, it’s miles incumbent upon the people of the board to meet their fiduciary tasks to DFRG shareholders by initiating a path of to explore all selections to salvage shareholder tag,” Glenn Welling, Engaged’s chief investment officer and major, wrote within the letter.
Irving, Texas-basically based Del Frisco’s shares at midday Thursday had been buying and selling up about 13.5 p.c, at about $7.70 a portion, from Tuesday’s close of $6.seventy eight. The foremost inventory markets had been closed Wednesday in observance of President George. H.W. Bush’s funeral. Del Frisco’s 52-week excessive modified into once $18.eighty five a portion and its low modified into once $5.86 a portion.
“We take into consideration there are loads of parties attracted to buying DFRG this day, both in pieces or in its entirety, at valuations that would provide shareholders a vital top price to essentially the most up-to-date portion tag,” Welling stated.
Del Frisco’s board stated the rights blueprint, or poison capsule, is determined to gallop out in a year on Dec. 4, 2019, and would be caused when a shareholder accumulated 10 p.c or extra of the corporate’s identical outdated inventory.
“The rights blueprint is designed to allow all Del Frisco’s shareholders to achieve the long-interval of time tag of their investment by decreasing the chance that any person or neighborhood would be triumphant in adjust of Del Frisco’s thru open-market accumulation with out precisely compensating the corporate’s shareholders for such adjust or providing the board ample time to invent told judgments,” Del Frisco’s stated in announcing the board’s approval of the poison capsule.
Welling stated Engaged, which owns bigger than Three.Three million Del Frisco’s shares, found the corporate’s efficiency “abysmal” since it went public in 2012 and that the corporate had underperformed its peers.
The underperformance, Welling stated, magnified by “missteps,” citing the acquisition of Barteca Restaurant Community.
Del Frisco’s in June got Norwalk, Conn.-basically based Barteca, parent to Barcelona Wine Bar and Bartaco, for $325 million. The company in September supplied its 14-unit Sullivan’s chain to Romano’s Macaroni Grill for approximately $32 million.
“It has arrive to our consideration that the acquisition of Barteca modified into once seemingly defensive in nature, supposed to dissuade an already alive to bidder (or bidders) from making a proposal to perform DFRG,” Welling stated. “Unfortunately, this location provides an space off of the board’s in some other case baffling resolution to stride to sing the acquisition of two totally unrelated restaurant ideas with out first securing financing for the deal.”
For the Zero.33 quarter ended Sept. 25, Del Frisco’s web loss, with particular charges, widened to $67.1 million, or an absence of $2.forty three a portion, from $1.eight million, or eight cents a portion, within the identical interval a year within the past. Revenues increased seventy three.7 p.c to $105.Three million from $60.6 million within the prior-year quarter.
The company’s complete identical-store sales decreased 1.9 p.c. By trace, identical-store sales within the quarter had been down 2.4 p.c at Del Frisco’s Double Eagle, down 7 p.c at Bartaco, down Zero.4 p.c at Del Frisco’s Grille and up 2.5 p.c at Barcelona.
Del Frisco’s Restaurant Community has 71 restaurants all the device thru Sixteen states and Washington, D.C.
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