Target: OSI Restaurant Partner (NYSE: OSI)
Sponsors: Bain Capital Partners, Catterton Partners
Purchase price: $3.2 billion
Advisor: Target: Wachovia Securities; Target’s special committee: Wachovia Securities, Piper Jaffray
Legal counsel: Target: Baker & Hostetler; Target Special committee: Wachtell Lipton Rosen & Katz; Sponsors: Ropes & Gray
Buyout deals have now stretched all the way to the Australian Outback, or at least corporate America’s version of it.
A special committee of independent directors, though unanimously recommending that shareholders accept the deal, plans to conduct a “market test” for the next 50 days in which it will solicit competing bids. The company says it expects the transaction to close by the end of next April. OSI company founders Robert Basham, Timothy Gannon and Chris Sullivan are also part of the Bain and Catterton consortium.
The company’s best-known brands, Outback Steakhouse and Carrabba’s, have lost market share amid softer sales during the year. In response, investors had bid down the company’s shares to a 52-week low point of $27.39 per share in August, far from the $46.62 per share it traded at in late January. The offer price on the deal, announced on Nov. 6, represents a premium of 23% above OSI’s closing price on the Friday before the deal was announced.
Raymond James analysts rated OSI’s stock as “underperform” after the bid was made public and said there was an approximately 40% chance of there being a more generous competing bid. Raymond James put the company’s value at approximately $43.50 per share. Analysts with Oppenheimer titled their report “Take the Money and Run” and downgraded OSI’s stock to “sell,” saying that the risk-reward of waiting for the deal to be finalized outweighs the risk of other increased bids. The Oppenheimer report rated the Bain and Catterton bid value as fair and said it is doubtful that another significantly higher bid would be made.
The market has seen several restaurant LBOs recently. A little over two months ago, Catterton Partners and