INDIANAPOLIS An investor group that includes the parent of Lone Star Steakhouse & Saloon disclosed Monday that it has amassed a 9.5-percent stake in family-dining operator and franchisor The Steak n Shake Co. with intentions to “maximize shareholder value” by “exploring an acquisition or other transaction.”
The group's largest investor is Dallas-based hedge fund HBK Investments LP, with an aggregate holding in Steak n Shake of 7.9 percent. The remaining interest is held by Dallas-based Lone Star Funds, owner of Lone Star Steakhouse & Saloon, and by individual investor Robert J. Stetson.
Lone Star Funds owned Captain D’s and Shoney’s until last year. It purchased the multi-brand Lone Star Steakhouse & Saloon in December for about $585 million.
The investor group said in its filing with the U.S. Securities & Exchange Commission that it did not intend to seek representation on Steak n Shake’s corporate board or engage in an acquisition or other transaction without first gaining support of Steak n Shake’s board.
Steak n Shake did not returned calls seeking comment by posting time.
The 9.5 percent holding represents about 2.7 million shares and was purchased since April for a total of about $41.2 million, according to the filing. Steak n Shake’s market capitalization is about $420.5 million, based on the company’s latest-quarter number of shares outstanding and its $14.78 per-share closing price on June 25, just prior to the investor group’s disclosure, which sent Steak n Shake’s stock price up more than 16 percent on Tuesday afternoon.
Steak n Shake operates 439 restaurants and franchises 51 locations. For the first half of the company’s fiscal 2007, ended in April, Steak n Shake’s profit fell 23 percent from a year earlier to $10.5 million, or 36 cents per share. The company said a same-store sales decline of 3.4 percent and an increase in deprecation expense negatively affected its earnings. Its total revenue for the two quarters increased 3.9 percent to $349.4 million mainly because of new restaurant openings.
For the remained of its fiscal 2007, Steak n Shake said it would introduce three new chicken sandwiches, entrée salads, “lighter” sides and continue to market its “fruit n frozen yogurt” milkshakes. The company also said it would introduce a “more upscale and well organized menu.”
