CKE Restaurants Inc. (CKR), the quick-service restaurant operator, announced recently that its shareholders have unanimously voted for its merger with Columbia Lake Acquisition Holdings Inc., an affiliate of Apollo Management VII, L.P. (“Apollo”). Apollo is a leading global alternative asset manager.
As per the agreement, CKE stockholders will receive $12.55 in cash for each share of the company they hold. The transaction is valued at approximately $1.0 billion Incorporatedluding refinancing of the company’s debt.
The transaction is expected to close by the end of the second quarter of fiscal 2011. The completion of transaction is subject to regulatory approval. After the completion of the transaction, CKE will become a private company, wholly owned by an affiliate of Apollo Global Management.
The company terminated its previous agreement with Thomas H. Lee Partners. In February 2010, CKE, the owner of the Hardee’s and Carl’s Jr. hamburger chains, had agreed to a buyout offer from Boston, Massachusetts-based private equity investment firm Thomas H. Lee Partners. The firm agreed to acquire CKE for around $928 million Incorporatedluding the assumption of approximately $309 million of net debt. CKE shareholders were to receive $11.05 in cash for each share of the company they held.
We expect timely completion of the acquisition and remain positive about the prospects of the acquisition, as CKE continues to struggle to post positive results.
CKE has been experiencing a sustained fall in its top line. After declining in all the quarters of 2010, total revenue tumbled 2.6% to $435.2 million in the first quarter of 2011 precipitated by a fall in same-store sales.
The sluggish economic environment, severe job losses and raging discount wars among fast-food chains such as McDonald’s Corporation (MCD), Burger King Holdings (BKC) and Yum! Brands (YUM) continue to hurt CKE’s same-store sales.
The same-store sales dipped 3.9% for the period, compared with a drop of 1.8% witnessed in the year-ago quarter. Same-store sales at the company’s restaurant concepts, Carl’s Jr. and Hardee’s restaurants, fell 6.1% and 1.2%, respectively during the quarter.
CKE owns, operates and franchises quick-service restaurants. The company operates and franchises 3,146 restaurants in 42 states and 16 countries Incorporatedluding 1,233 Carl’s Jr. restaurants and 1,901 Hardee’s restaurants.
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