In recent months, Red Robin announced the closing of 10 of its restaurants and the retirement of their CEO. Now there is more distressing news. Does this leave the chain on shaky ground?
Vintage Capital, which holds 1.5 million shares or about 12 percent of Red Robin's stock, has offered to buy the remaining 88 percent of the struggling burger chain.
Vintage proposed an all-cash transaction worth $461.4 million.
In a letter to Red Robin, Vintage called on the brand to begin auctioning off the company. Vintage offered a takeover bid with a price of $40 per share.
Red Robin’s closing price on June 12 was $25.46. After the letter was released June 13, shares jumped 24.39 percent to $31.67. This time last year, the stock traded over $54.
Red Robin adopted a short-term Shareholder Rights Plan, or a so-called "poison pill" to investors. The burger plans to deter investors from “gaining control of Red Robin through the open market.
CEO Denny Marie Post retired in April after joining the company seven years ago. Vintage expressed concerns the company isn’t able to recruit a replacement because of its ongoing sales declines.
If no action is taken regarding the sale of Red Robin then Vintage plans on holding a special meeting for shareholders to remove board members and replace them with directors.
Red Robin has struggled in recent years to generate consistent growth.
Same-store sales have remained mostly negative since 2016.