Tilman Fertitta, the CEO of Landry’s Restaurant’s, has finally persuaded the board of the seafood chain, which also owns the Golden Nugget in Las Vegas, to accept his new takeover offer of $24 a share, or $1.4 billion. Fertitta’s latest bid is higher than his previous $21 a share offer and vastly better than his $14.75 per share bid back in November. Shareholders sued to block that takeover.
But, it appears the battle between Landry's and its shareholders isn't over yet.
The stock is trading through the current bid by about 50 cents a share and some shareholders are still miffed at what they see as a weak go-shop provision in the merger agreement.
According to sources, the go-shop provision gives Fertitta the right to match or beat any competing offers that come in during the 45-day go-shop. While “matching rights” are common in certain go-shop provisions, some studies suggest they can chill the market for any competing offers.
Look for some of Landry’s shareholders, including Bill Ackman’s Perhsing Square Capital Management, to take issue with both the go-shop provision and Fertitta's price. Pershing owns about 23 percent economic interest in Landry’s, but controls about 10 percent of the vote. Fertitta owns about 55 percent of the voting shares.
Still, the merger agreement requires a majority of the minority of Landry’s shareholders to approve the deal. Fertitta’s first bid for the company came in June 2008, but later that year, the board said Fertitta was having trouble financing the deal.
The credit markets have improved since then, so Fertitta may not have a problem financing the deal these days. Today’s deal is also a partial victory for Ackman, which bought the stock around $18 a share, but was accumulating shares when it was trading as low as $11. But, just because Bill is up on the investment doesn’t mean he won’t put up a fight. Stay tuned.