Multi-concept restaurant company O'Charley's Inc. (CHUX) Monday said it had agreed to be acquired by Fidelity National Financial, Inc. (FNF), for $9.85 per share, representing a total equity value of approximately $221 million. The transaction value represents a 42 percent premium to O'Charley's closing stock price of $6.92 on February 3. Separately, O'Charley's reported its results for the fourth quarter.
Under the terms of the definitive agreement, Jacksonville, Florida-headquartered FNF would commence a tender offer for all the outstanding shares of Nashville, Tennessee-headquartered O'Charley's. FNF currently owns 2.1 million or 9.5 percent of the outstanding shares of common stock of O'Charley's.
The initial tender is expected to expire on April 2, 2012, and to close shortly thereafter, assuming that shares that, combined with FNF's existing stake, represent more than a majority of the outstanding shares of O'Charley's are properly tendered and not withdrawn.
FNF chairman William Foley, II, said," With more than 340 restaurants and over $800 million in revenue, O'Charley's is an attractive company with three proven restaurant concepts in O'Charley's, Ninety Nine and Stoney River."
For the fourth quarter ended December 25, O'Charley's reported a net loss of $8.1 million or $0.37 per share, narrower than the net loss of $20.6 million or $0.97 per share for the fourth quarter of 2010.
Impairment and disposal charges were substantially lower from last year at $3.1 million versus $9.2 million. Results for the year-ago period also included a net loss from discontinued operations of $4.2 million.
Net interest expense in the fourth quarter declined to 0.3 percent of revenues from 1.3 percent of revenues last year, and includes the effect of the recently completed sale and leaseback transaction, which is expected to reduce annual interest expense by approximately $10.0 million.
Total revenues for the quarter dropped to $182.2 million from $183.5 million last year.
O'Charley's comparable sales for company-operated restaurants declined 1.5 percent in the fourth quarter, but were positive in December.
Blended comparable sales increased 1.1 percent for the quarter - the fourth consecutive quarterly increase. Blended comparable sales for full-year 2011 grew 1.7 percent, based on an increase of 0.3 percent for O'Charley's, 3.9 percent for Ninety Nine Restaurants and 7.2 percent for Stoney River Legendary Steaks.
Full-year loss narrowed to $12.1 million or $0.56 per share from loss of $34.9 million or $1.65 loss per share in 2010. Full-year revenues dropped to $827.1 million from $830.1 million in 2010.
David Head, president and chief executive officer of O'Charley's, said, " We believe FNF's expertise and commitment to long-term growth will enable O'Charley's Inc. to complete its turnaround and achieve its growth objectives, benefiting our employees, guests, business partners and other stakeholders."
The transaction was unanimously approved by the boards of directors of both companies. The transaction is targeted to close in the second quarter of 2012, assuming execution of the tender process and satisfaction of the conditions to closing. Under the terms of the definitive agreement, the company may solicit superior proposals from third parties through March 6, 2012.
CHUX is currently trading at $9.80, up $2.88 or 41.62% on the Nasdaq. Over the past year, the stock traded in a range of $4.51 - $7.99. FNF is currently trading at $18.23, down $0.20 or 1.09%, on the NYSE.
For comments and feedback: editorial@rttnews.com