Red Robin has rejected a hostile $519 million buyout bid by activist investor Vintage Capital, saying its strategic plan was a better option for shareholders.

The struggling restaurant chain’s shares fell 1.5% to $32.05 on Thursday after it announced its board had determined that Vintage’s $40-per-share offer was “not in the best interests of all shareholders” and that its strategic plan “positions the company to deliver greater long-term value.”

Red Robin also said it had named veteran restaurant industry executive Paul Murphy as its new CEO, replacing Pattye Moore, who had been serving on an interim basis.

Private equity firm Vintage Capital, Red Robin’s third-largest shareholder, has been seeking to buy the 88% of the company it does not already own. It has told Red Robin it wanted to find an “A-plus operator” as the new CEO.

“The board is confident [Murphy] is the right leader to drive the continued transformation of Red Robin and restore the Company to sustainable growth and profitability,” Moore said in a news release. “Paul brings a multi-decade-long track record of substantial shareholder value-creation, as well as a unique combination of operational, brand-positioning, and turnaround expertise, making him ideally suited to lead Red Robin.”

Murphy, currently the executive chairman at Noodles, previously served as CEO of Del Taco Restaurants and Einstein Noah Restaurant Group.

As the Denver Business Journal reports, “Red Robin has suffered for several years from declining traffic to its stores as more customers seek to pick up their food or have it delivered for them.”

“Former CEO Denny Marie Post announced in late 2017 that the 560-restaurant chain would stop building new brick-and-mortar locations in order to determine how to increase its off-premise sales,” the Journal added. “While Red Robin has increased catering and delivery sales significantly since then, that did not offset even greater losses of revenue from falling in-store traffic.”

Red Robin’s strategic initiatives include continuing to build the takeout and catering businesses and implementing digital platforms. “These initiatives are already delivering progress,” it said Thursday.

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