California Pizza Kitchen Inc., operator of the restaurant chain of the same name, agreed to a $470 million takeover by Golden Gate Capital Corp., more than a year after beginning a search for a suitor.
The per-share price is $18.50, the companies said today. That’s 11 percent more than yesterday’s close. Golden Gate is paying about 7.7 times earnings before interest, taxes, depreciation and amortization, matching the median of 5 restaurant takeovers over the past year, according to data compiled by Bloomberg.
The Los Angeles-based pizza chain began reviewing strategic options in February 2010 with Moelis & Co. Co-Chief Executive Officers Richard Rosenfield and Larry Flax, who founded the chain more than 25 years ago, have sought to revive sales after five straight quarterly declines.
“Golden Gate is going to make them more aggressive,” said Bill Kavaler, senior special situations analyst at Oscar Gruss & Son Inc. in New York.
Clinton Group Inc., which owns more than 5 percent of California Pizza, said it’s proposing alternatives to the deal, including California Pizza taking on more debt and using the cash to buy back shares at $19.50 or more. The New York-based hedge-fund manager is run by George Hall.
California Pizza rose $1.76, or 11 percent, to $18.47 at 4 p.m. New York time in Nasdaq Stock Market trading. The shares had fallen 3.3 percent this year before today.
Golden Gate’s Investments
Golden Gate has made investments in restaurant chains including Romano’s Macaroni Grill in 2008 and On the Border Mexican Grill in March 2010. Sarah Grover, a spokeswoman for California Pizza, declined to comment, as did Barry O’Sullivan, a spokesman for San Francisco-based Golden Gate.
The transaction should be completed in the third quarter. There have been almost 60 restaurant transactions globally in the past year, Bloomberg data show. The largest of these was the $3.9 billion acquisition of fast-food chain Burger King Holdings Inc. in October.
California Pizza’s revenue declined less than 1 percent to $156 million in the quarter ended April 3. The company owns 205 of its locations with the remaining run by franchisees in countries including China, Japan and Mexico.