SCOTTSDALE Ariz. Kona Grill Inc., owner of 19 grill-sushi casual-dining restaurants, rejected last month a going-private buyout offer from investor Mill Road Capital LP, according to a late Thursday filing with the Securities and Exchange Commission.
Mill Road, which is based in Greenwich, Conn., filed with federal regulators on Thursday its current 8.2-percent stake in Kona Grill, and revealed that it had offered to purchase all of the restaurant company’s outstanding stock for $10.75 per share in March.
At that time, Mill Road held a 4.9-percent stake in Kona Grill and the per-share buyout price represented a 23-percent premium. The deal would have been valued at about $71 million, based on Kona Grill’s total number of outstanding shares.
After discussion at Kona’s board of directors meeting, however, the restaurant company rejected the offer in early May, according to Mill Road’s SEC filing.
In the investor’s buyout offer, Mill Road said it was “extremely impressed” with Kona Grill’s management and that it believed “the public market does not adequately value small companies such as Kona.”
Kona Grill currently trades on the Nasdaq, and its 52-week stock price range is between $6.15 per share and $20 per share. Its market capitalization on Friday totaled about $56 million. On news of the filing, Kona’s shares rose nearly 15 percent on Friday to close at $8.49.
Paul Westra, a securities analyst with Cowen and Co. in New York, said he didn’t “expect this takeover to succeed” because he did not view the offer to be a “fair, long-term value” for the restaurant company. Westra, who has an “outperform” rating on Kona Grill, said the company is “executing operations well” in this difficult economic environment and has taken the right steps for shareholders by slowing unit growth and instituting a share repurchase plan.
“While we are supportive of large shareholders offering shareholder-friendly initiatives,” Westra said. “We do not believe a major change in direction is warranted.”
Kona this month opened a new unit in Gilbert, Ariz., bringing its total to 19 stores in 12 states.