Buffalo Wild Wings (NASDAQ: BWLD) shares spiked Tuesday on a $2.3-billion takeover bid submitted by private-equity firm Roark Capital. The firm’s bid for the restaurant chain is worth over $150 per share.
Roark’s offer of more than $150 per share was a premium of at least 28% to the fast-food chain’s close on Monday.
Wedbush analysts on Tuesday raised their price target to $130 from $115 and called the offer realistic. Buffalo’s management could view it favorably as the stock’s current price presents limited scope for same-store sales growth and margin trajectory, they said in a client note.
Activist hedge fund Marcato Capital Management has been pressuring Buffalo Wild Wings to change its leadership and improve its restaurant operations.
Chief Executive Sally Smith said she would retire by the end of the year after Marcato won a bitter proxy battle in June that put three of its directors on the chicken-wing restaurant’s board.
Experts also say Roark has stakes in other restaurants chains like Arby’s and CKE Restaurants, the owner of Carl’s Jr, and could be a credible buyer of Buffalo Wild Wings.
Restaurant industry watchers have remarked that Buffalo Wild Wings was not that long ago considered one of the best stocks on Wall Street. The chain had a long string of same-store sales increases, encouraged customers to linger over beer by watching sports and was generally the best-performing name in casual dining.
The stock vaulted in the last hour of trading on Tuesday, climbing $28.90, or 24.7%, to $146.15.
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