TAMPA FLA. OSI Restaurant Partners Inc., the struggling parent of the Outback Steakhouse chain will have what it has wanted since last year: time to regroup away from the scrutiny of Wall Street. —Now that shareholders have approved the $3.2 billion going-private buyout of
Even before the deal was approved earlier this month, the operator or franchisor of eight brands boasting 1,457 restaurants said that under the new ownership of private-equity firms Bain Capital Partners LLC and Catterton Management Co. LLC and the company’s founders, OSI would focus on a turnaround of its flagship concept, the 953-unit Outback chain. But some observers speculate that the buyout, which was expected to close on or before June 19, also could hasten the divestiture of some of OSI’s smaller brands, which include Carrabba’s Italian Grill, Bonefish Grill and Fleming’s Prime Steakhouse & Wine Bar. —Now that shareholders have approved the $3.2 billion going-private buyout of
Tampa-based Outback, like many of its casual-dining peers, has struggled since 2005 in the face of such macroeconomic stresses as increased gas prices and other pressures on consumers’ wallets. The chain most recently reported a same-store sales decline of 1.4 percent for May, and has been recording negative sales and traffic trends for more than a year. —Now that shareholders have approved the $3.2 billion going-private buyout of
The company said it would slow unit growth of the Outback chain, reimage restaurants and continue testing new menu formats introduced earlier this year that were designed to broaden the concept’s appeal. It also said it planned to continue developing its smaller brands. —Now that shareholders have approved the $3.2 billion going-private buyout of
But John S. Glass, an analyst with CIBC World Markets, said in a published note just after the June 5 shareholder approval that he expects OSI to quickly sell some brands and reduce the new owners’ equity investment. He said that the most likely sale would be the dinner-only Bonefish chain, which boasts about 127 units and posted about $327 million in sales for the latest fiscal year ended in December 2006. —Now that shareholders have approved the $3.2 billion going-private buyout of
Glass projected that Bonefish could be sold for about $350 million. He also said Roy’s, Carrabba’s and even Fleming’s could be put on the block. —Now that shareholders have approved the $3.2 billion going-private buyout of
However, OSI officials have never supported such conjecture. Last November, when OSI first announced intentions to pursue a buyout, chief executive Bill Allen said the company planned to remain intact and that the private-equity owners approved of its strategic position. In proxy materials, OSI said its turnaround would be contingent on both the resumption of positive sales at Outback and the growth of developing brands. —Now that shareholders have approved the $3.2 billion going-private buyout of
When asked about future brand divestitures immediately following the June 5 shareholder meeting at which the buyout was approved, OSI founder Chris Sullivan said that particular strategy had not yet been considered. —Now that shareholders have approved the $3.2 billion going-private buyout of
“We have no idea about a spin-off,” he said. “We haven’t even had our first board meeting yet. We are very excited about the new team.” —Now that shareholders have approved the $3.2 billion going-private buyout of
Glass said in his note that the OSI buyout suggests that private-equity interest in restaurants is still high, but may be more valuation-sensitive than ever, which could affect other restaurant companies currently in play, like Applebee’s and Wendy’s. —Now that shareholders have approved the $3.2 billion going-private buyout of
Applebee’s International Inc., which also has suffered weak sales and slowed consumer traffic for more than two years, announced in February that it would begin exploring strategic alternatives, including a sale of the company. In April and May the company said it had received numerous proposals of interest, but would continue exploring options prior to soliciting binding purchase offers. —Now that shareholders have approved the $3.2 billion going-private buyout of
Many analysts and industry observers contend that Applebee’s would follow OSI’s footsteps and undertake a going-private, leveraged buyout sponsored by private-equity firms, which have been attracted to underperforming companies. —Now that shareholders have approved the $3.2 billion going-private buyout of
The $3.2 billion OSI deal was approved despite much shareholder criticism and two postponed votes were delayed so that the buyers could solicit enough support to make the deal happen. The vote was originally slated for May 8. In addition to the two private-equity firms, the company’s founders and certain members of management participated in the buyout. —Now that shareholders have approved the $3.2 billion going-private buyout of
Prior to the deal’s approval, the buyers had to sweeten their offer and on May 21 upped the cash buyout price to $41.25 per share, from $40. As part of that amended bid, OSI founders Sullivan, Bob Basham and Tim Gannon agreed to accept $40 per share for their holdings. They did not vote on the deal, leaving the decision to outside investors. The founders will exchange their shares not sold for shares of the eight chains’ new parent company, Kangaroo Holdings Inc. —Now that shareholders have approved the $3.2 billion going-private buyout of
The special shareholder meeting June 5 lasted about 10 minutes, just long enough to announce the voting results to a sparsely populated meeting room. The large room at A la Carte Pavilion in Tampa contained about a hundred chairs, yet few of them were taken. Reporters mingled around the front table following the results, but few others remained to ask questions. —Now that shareholders have approved the $3.2 billion going-private buyout of
Shareholder Susan Sparks of Clearwater, Fla., said she noticed that there were more reporters at the meeting than shareholders. —Now that shareholders have approved the $3.2 billion going-private buyout of
Sparks said that she and her mother were disappointed in the price they received for the 50 shares they each owned. Sparks purchased her shares at a price higher than the $41.15 she will receive, and she echoed the sentiments voiced by some investors and analysts that the shareholder sale, which did not include a public auction, favored OSI’s founders and management and could have been conducted more fairly. —Now that shareholders have approved the $3.2 billion going-private buyout of
Sparks’ mother, Gisella Sparks, peppered OSI founder Chris Sullivan with questions as he walked to his car after the final shareholder meeting: “Chris, I see the parking lots full and people waiting in line to get in your restaurants. What’s wrong with the earnings? Why couldn’t you get the stock price higher?” —Now that shareholders have approved the $3.2 billion going-private buyout of
Sullivan responded that all casual-dining restaurant chains are suffering because of rising costs and other external factors. He said he and the new board would address those pressures and work to get OSI poised for the future. —Now that shareholders have approved the $3.2 billion going-private buyout of
Sullivan also said that while the shareholder vote was very tight, he and his team were pleased the deal was approved and think that it is the right time for the company to go private. —Now that shareholders have approved the $3.2 billion going-private buyout of
“If you look back to the mid-1990s, Brinker International and Darden Restaurants were kind of at the point where our concepts are at right now,” Sullivan said. “We are getting ready, getting positioned, for the next 15 to 20 years…and that’s when your stock gets hammered.” —Now that shareholders have approved the $3.2 billion going-private buyout of
The company’s stock price has been as low as $27.30 per share within the past 52 weeks, prior to the announcement that a buyout was planned. —Now that shareholders have approved the $3.2 billion going-private buyout of