Fertitta Takes Landry's (LNY)

Landry’s Restaurants, Inc. (NYSE: LNY) has announced that it has entered into a definitive agreement with Fertitta Holdings, Inc.

Fertitta has agreed to acquire all outstanding common stock for $21.00 per share in cash.  This represents a premium of approximately 37% over the closing share price of the Company’s common stock on April 3, 2008.  This was the last day before disclosure of the revised offer made by Mr. Fertitta to acquire the company.  The total value of the transaction is approximately $1.3 billion, which includes approximately $885.0 million of debt.

Fertitta is a newly formed entity wholly owned by the company’s Chairman, President, CEO and original founder, Tilman J. Fertitta.  Mr. Fertitta beneficially owns approximately 39% of the Company’s outstanding shares of common stock. 

In short this is nothing short of a management led buyout, and one that many thought was a dead deal before the revisions.  Shares closed at $16.79 on Friday and the equity market cap of the stock was $271 million.

As with most management led buyouts where the founder controls a huge portion of the stock, there are likely to be any "higher bids" that magically come from elsewhere.  The only issue here that might seem to come up is that this acquisition price still buries shareholders who owned this stock before 2008.  Whether or not those older shareholders can mount any demands for denial or demands for money is another issue all together.

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Jon C. Ogg
June 16, 2008