P.F. Chang’s China Bistro Inc., the biggest Asian full-service restaurant operator in the U.S. by market share, agreed to be taken private by Centerbridge Partners LP in a deal valuing the company at $1.1 billion.
The takeover would give New York-based Centerbridge, which has about $20 billion in capital under management, a chain with almost 400 restaurants under the P.F. Chang’s China Bistro and Pei Wei brands. Centerbridge offered $51.50 a share in cash, about 30 percent higher than the average share price over the past 30 days, the companies said today in a statement.
The deal brings the value of private-equity transactions in the restaurant industry over the past two years to $12 billion, according to data compiled by Bloomberg. Restaurant chains have been a favorite target for private investors, because their cash-flow makes financing deals easy and brands can benefit from cost-cutting or expansion measures.
“Any potential buyer will pave the way for greater cost scrutiny, potential closures of underperforming units and a more rapid turnaround,” Stephen Anderson, a New York-based analyst at Miller Tabak & Co., said in a research note today about the deal.
P.F. Chang’s climbed 30 percent to $51.48 at the close of trading in New York. Scottsdale, Arizona-based P.F. Chang’s has gained 67 percent this year.
Burger King Worldwide Holdings Inc., which was taken private in 2010 by New York-based 3G Capital Inc. in a deal valued at $3.3 billion, has opened new restaurants in Brazil and Vietnam. The company will go public again after merging with a company owned by William Ackman, it said last month.
Last year, Atlanta-based buyout firm Roark Capital Group bought about 82 percent of Arby’s Restaurant Group Inc. from Wendy’s Co. in a deal valued at $430 million. Arby’s has sought to turn around the brand after revenue under Wendy’s declined from 2008 to 2010. Comparable restaurant sales rose about 5.5 percent last year, and customer traffic trends also improved, chief operating officer George Condos said in January.
Under the terms of its agreement with Centerbridge, P.F. Chang’s may solicit proposals from other bidders in the next 30 calendar days. First-quarter revenue was little changed at $318.9 million, according to a separate statement.
P.F. Chang’s operated 204 of its Bistro restaurants in 39 states and 170 Pei Wei locations in 23 states as of Jan. 2, according to its website. The company operates 16 Bistro locations in international markets.
The company has recently tried to boost restaurant sales by introducing a new lunch menu with items such as ginger chicken with broccoli and shrimp with lobster sauce for less than $10. Sales at P.F. Chang’s Bistro stores open at least 18 months have declined for four straight quarters as other casual-dining chains have advertised discounts and special deals.
Same-store sales fell 0.6 percent at P.F Chang’s Bistro and 1.7 percent at Pei Wei due to less traffic in the first quarter, the company said today in the earnings statement.
“Being a private company will provide us with greater flexibility to focus on our long-term strategic plan of elevating our guest experience, enhancing our value proposition, growing traffic and improving the performance of our brands,” Richard Federico, the company’s chief executive officer, said in the statement announcing the transaction.
P.F. Chang’s is the biggest Asian full-service restaurant in the U.S. with about 6 percent of market share, according to Technomic Inc., a Chicago-based researcher. Benihana Inc. ranks second with 1.7 percent.
P.F. Chang’s, which first opened in Scottsdale in 1993, was named for its founders Paul Fleming and Philip Chiang. The company’s fast-casual brand, Pei Wei, sells noodle bowls, salads and small plates such as crab wontons and chicken lettuce wraps.
Centerbridge was founded by Mark Gallogly, a former Blackstone Group LP executive, and Jeffrey Aronson, who previously led the distressed-investing team at Angelo Gordon & Co. The private-equity firm last year raised $4.25 billion from investors for its second fund targeting buyouts and restructurings.
P.F. Chang’s is getting financial advice from Goldman Sachs Group Inc. and legal advice from DLA Piper LLP. Wells Fargo & Co. and Deutsche Bank AG are advising Centerbridge, and Weil Gotshal & Manges LLP is serving as legal counsel for the private-equity firm.