Hardee's Restaurant Operator CKE to Be Acquired by Apollo for $694 Million

CKE Restaurants Inc., operator of the Carl’s Jr. and Hardee’s fast-food chains, said it will sell itself to an affiliate of Apollo Management LP for $12.55 a share in cash, or about $694 million.

CKE terminated a previous merger agreement with affiliates of Thomas H. Lee Partners LP, it said in a statement today. THL Partners, which owns a stake in Dunkin’ Brands Inc., had offered $11.05 a share.

CKE said on April 7 it had received a rival proposal from a then-unidentified bidder that may top the bid it had accepted from THL Partners in February. The acquisition by Apollo affiliate Columbia Lake Acquisition Holdings Inc. shows private equity firms are interested in restaurant chains because of their relatively low debt and good cash flow, said R.J. Hottovy, a restaurant analyst at Chicago-based Morningstar Inc.

Apollo spokesman Charles Zehren declined to comment. CKE spokeswoman Beth Mansfield and THL Partners spokesman Matt Benson didn’t return messages left after-hours at their offices.

CKE has 3,141 restaurants in 42 states and 14 countries, including 1,224 Carl’s Jr. restaurants and 1,905 Hardee’s sites. Founder Carl Karcher borrowed $311 to buy a Los Angeles hot-dog cart in 1941 and became a pioneer in the industry, introducing salad bars, char-broiled chicken-breast sandwiches and self- service beverage stations. He died in 2008.

The Carpinteria, California-based company on March 24 reported fiscal 2010 sales fell 4.3 percent to $1.42 billion, the third straight annual decline.

The amount of the Apollo affiliate’s offer is based on the number of CKE shares outstanding as of March 17, according to Bloomberg data.

Apollo Management is headed by Leon Black, the former head of mergers and acquisitions at Drexel Burnham Lambert Inc. The New York-based company manages about $54 billion.

CKE fell 2 cents to $12.85 in New York Stock Exchange composite trading yesterday. The shares have climbed 44 percent since Feb. 26, when the initial deal with Boston-based THL was announced.

To contact the reporters responsible for this story: Peter J. Brennan at pbrennan3@bloomberg.net; Mike Harrison at mharrison5@bloomberg.net.

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