Einstein Noah to consider business combination, sale
by Jeff Gelski
LAKEWOOD, COLO. — The board of directors for Einstein Noah Restaurant Group, Inc. has authorized a review of strategic alternatives available to the company, including a possible business combination or sale of the company, to maximize value for all shareholders.
As of March 31, Greenlight Capital, L.L.C. and its affiliates beneficially owned about 64% of the company’s common stock, which means Greenlight Capital has sufficient voting power, without the vote of any stockholders, to determine whether a change in control of the company may occur.
Einstein Noah Restaurant Group said no timetable exists for the review and there is no assurance the evaluation of alternatives will result in a sale of the company or in any other transaction. As part of the evaluation process, the board of directors selected Piper Jaffray to serve as its financial adviser and Bryan Cave HRO to serve as its legal adviser.
Lakewood-based Einstein Noah Restaurant Group operates under the Einstein Bros. Bagels, Noah’s New York Bagels and Manhattan Bagel brands. As of April 3, there were 777 total restaurants in operation under those three brands.
Einstein Noah Restaurant Group announced the strategic review on May 3, the same day it reported net income of $3,304,000, equal to 19c per share on the common stock, for the first quarter ended April 3, which marked a 174% increase from $1,168,000, or 7c per share, in the first quarter of the previous year.
First-quarter total revenues of $104,873,000 were up 3.6% from $101,245,000 in the previous year’s first quarter. System-wide comparable store sales increased 1.1%.
“Our new smart choices menu and expanded specialty beverage platform is helping to facilitate top-line momentum while we substantially improved gross margins through our ongoing cost efficiency program and sales leverage,” said Jeff O’Neill, president and chief executive officer of Einstein Noah Restaurant Group. “We are also capitalizing on greater catering sales, which experienced 19% growth during the period and will remain an important contributor to raising our average check on a go-forward basis.”
In fiscal year 2012, Einstein Noah Restaurant Group expects 60 to 80 system-wide restaurant openings and capital expenditures of $24 million to $26 million.
“Over the past several years, we have been working diligently to build a stronger foundation and enhance value for our stockholders by shifting to an asset-light expansion strategy, de-levering our balance sheet, inaugurating a dividend and embarking on a comprehensive cost-savings program,” Mr. O’Neill said. “After careful consideration, our board of directors believes that it is now an opportune time to review our strategic alternatives available to the company, including a possible business combination or sale of the company, as the next step in efforts to maximize value for all stockholders and positively position Einstein Noah for the future.”