SCOTTSDALE, Ariz. » P.F. Chang’s is being acquired and taken private in a deal valued at $1.09 billion.
CEO Rick Federico said Tuesday that the deal with Centerbridge Partners LP will give the company greater flexibility in improving its restaurants. The Scottsdale, Ariz., company, which operates its namesake restaurants, Pei Wei Asian Diners and True Food Kitchen, has been struggling to update its brand amid growing competition. Earlier this month, P.F. Chang’s rolled out a new menu to lure more budget-conscious diners.
(Hawaii’s two P.F. Chang’s restaurants are in Honolulu, at the Hokua on Ala Moana Boulevard and in Waikiki, at Royal Hawaiian Center. They are owned and operated by PFC Hawaii LLC, which is the exclusive Hawaii licensee for the restaurant chain and which also is a joint venture with P.F. Chang’s China Bistro Inc., according to Marketing Director Sherri Rigg. "At this point we’ve been informed that there will be no changes" in local operations, she said.)
P.F. Chang’s was established in Scottsdale in 1993 and is named for its founders, Paul Fleming and Philip Chiang. The latter name was simplified for the U.S. market.
New York’s Centerbridge Partners LP will buy shares of P.F. Chang’s China Bistro Inc. for $51.50 each. The cash offer represents a 30 percent premium over the company’s Monday closing stock price. Shares of P.F. Chang’s soared $11.79, or 29.7 percent, to $51.48 on Tuesday.
P.F. Chang’s said Tuesday that its net income fell 41 percent in the first quarter as revenue at restaurants open at least a year declined.
For the three months ended April 1, the figure slipped 0.6 percent at the company’s namesake restaurants and 1.7 percent at Pei Wei restaurants.
R.W. Baird analyst David Tarantino said the company has been pursuing a wide range of turnaround initiatives after a sluggish performance last year. The company has been focusing on reducing portion sizes and improving price points at its Pei Wei restaurants and remodeling stores and enhancing service at its P.F. Chang’s Bistros.
Net income for the latest quarter was $6.3 million, or 30 cents per share, down from $10.6 million, or 46 cents per share, in the same quarter last year. Excluding one-time gains and losses, net income was 35 cents per share for the recent quarter. Revenue edged up slightly to $318.9 million from $317.4 million.
Profit and revenue fell just shy of Wall Street predictions, according to FactSet.
Centerbridge will begin a tender offer for P.F. Chang’s shares no later than May 15. In order for the deal to close, about 83 percent of the shares need to be tendered. P.F. Chang’s said it can also seek out competing bids until May 31.