Red Robin Responds To Activist Investor Vintage Capital

Red Robin Gourmet Burgers, Inc. RRGB issued a response Thursday to activist investor and large shareholder Vintage Capital.

Vintage Capital's Acquisition Proposal

Vintage Capital owns more than 11.5% of Red Robin and offered to acquire the hamburger chain in June 2019 for $40 per share, or a 58% premium to its unaffected stock price.

The offer was swiftly rejected and Vintage said in a Wednesday letter that Red Robin continues to refuse to discuss a going-private transaction.

Vintage said Red Robin's board "has not been transparent" with investors about other proposals it has received from "parties who have the obvious financial capacity and motivation" to acquire the company.

Vintage said it is nominating four individuals to Red Robin's board:

B.Good board member Anthony Ackil.

UBIF Franchising Co. Vice President Kenneth Todd Evans.

Gibsons Restaurant Group Chairman and General Counsel Stephen Lombardo III. 

Ruth's Chris Steak House ex-CEO and current National Restaurant Association board member Craig Miller.

Red Robin Responds

Red Robin responded in a Thursday letter and reaffirmed its commitment to act in the best interest of all shareholders and to continue engaging with all shareholders.

The company defended its recent track record and steps taken under the leadership of its board to spur long-term growth.

Most recently, the company hired five new directors, four of which are independent. The company also hired a new CEO, Paul Murphy III, in October.

Under the new leadership team, a turnaround plan was put in place and financial goals and targets for 2023 were set, according to Red Robin.

Red Robin said it has had momentum of late, including two consecutive quarters of comparable restaurant revenue growth and improvements in financial, operating and guest metrics.

"Red Robin has identified several clear strategic initiatives and capital allocation policies that it believes will drive profitable, sustainable growth while enabling the company to de-lever and return significant capital to shareholders," the letter said.

Red Robin shares were up 3.25% at $27.63 at the time of publication Friday. 

Related Links:

Red Robin Reiterates That Vintage Capital's Proposal Undervalues The Company

Red Robin CEO Explains Turnaround Plan At ICR Conference

Photo by Cbraccialini via Wikimedia.