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Centerbridge makes a meal of P.F. Chang's

by Lou Whiteman  |  Published May 1, 2012 at 11:35 AM
PF-Chang_227x128.jpgP.F. Chang's China Bistro Inc. agreed Tuesday, May 1, to be taken private by Centerbridge Partners LP in a deal that values the casual-dining chain at $1.1 billion.

Terms of the transaction call for New York-based Centerbridge to pay $51.50 per share in cash for P.F. Chang's, a premium of about 30% over the company's $39.69 Monday close. The chain had about $50 million in cash and just $1.24 million in debt at year's end.

Scottsdale, Ariz.-based P.F. Chang's operates more than 350 Asian-styled restaurants, generating Ebitda of $132.83 million on sales of $1.24 billion in the 12 months ending Jan. 1. But the company's shareholders have had a turbulent ride of late, losing nearly 40% of its value in the first nine months of last year before recovering in part on takeover speculation.

P.F. Chang's announced the deal on the same day that it reported a 40% drop in first-quarter earnings, caused largely by higher expenses. The company earned $6.3 million on sales of $318.9 million in the quarter, compared to a $10.6 million profit on $317.4 million in revenue in the same three months of 2011.

Company chairman and CEO Rick Federico in a statement said that Centerbridge "recognizes the value" of the business while providing shareholders with a "substantial" premium.

"We are confident that being a private company will provide us with greater flexibility to focus on our long-term strategic plan of elevating our guest experience, enhancing our value proposition, growing traffic and improving the performance of our brands," Federico said.

Private investors have had a healthy appetite for restaurant chains. Earlier this year William Foley's Fidelity National Financial Inc. acquired Nashville steak house chain O'Charley's Inc. for $221 million in enterprise value. And late last year Landry's Restaurants Inc.'s owner Tilman Fertitta bought both steak house chain Morton's Restaurant Group Inc. for $117 million and McCormick & Schmick's Seafood Restaurants Inc. of Portland, Ore., for $131.6 million.

Goldman, Sachs & Co. is providing financial advice and DLA Piper LLP legal counsel to P.F. Chang's. Wells Fargo Securities LLC and Deutsche Bank Securities Inc. are serving as financial advisers to Centerbridge. The private equity firm is taking legal counsel from Weil, Gotshal & Manges LLP's Doug Warner, Mike Lubowitz, Angela Fontana, Kelly Dybala and Heather Emmel.


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Tags: Centerbridge Partners LP | China Bistro Inc. | M&A | P.F. Chang | PE

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