NEW YORK ( TheStreet) -- McCormick & Schmick's Seafood Restaurants (MSSR) said on Tuesday its board agreed to a sale of the company to Landry's Restaurants (LNY) for $8.75 a share in cash, for a total equity value of $131.6 million.
The deal to buy McCormick's represents a premium of about 29% to McCormick & Schmick's closing stock price on Monday. McCormick shares rose nearly 28% to $8.65 in premarket trading, but are still below their high of $10.47 a share reached in February.
Overall, the stock has fallen more than 40% since its 2004 initial public offering. The company has suffered consecutive quarterly losses this year after posting a $23.19 million annual loss in 2010.
The company's biggest shareholders are Landry's founder Tilman J. Fertitta; Wellington Management; Michael Murphy; Dimensional Fund Advisors; Royce and Associates; and hedge funds Carlson Capital and AQR, all with larger than 3% holdings in McCormick shares. Co-founder Douglas Schmick owns more than 50,000 shares.Landry's said it will finance the transaction by using both its cash and issuing debt, which it already has arranged financing for. Currently, Landry's has nearly $60 million in cash and short-term investments and more than $1 billion in total debt. The Katy, Texas-based seafood company expects its purchase to close in late December or early January 2012, according to a press release announcing the deal. "After a broad and comprehensive evaluation of strategic alternatives, the McCormick & Schmick's Board of Directors concluded that the sale of the Company to Landry's will provide substantial and immediate cash value for our stockholders," said Douglas Schmick, chairman. In April, Fertitta made a bid to buy McCormicks for $9.25 a share, but he withdrew the offer in July. At that point, Discovery Group, led by Murphy, announced a 6.3% stake in the seafood chain, according to filings with the Securities and Exchange Commission, potentially signaling that a deal was still expected. Founded in the early 1970s by Bill McCormick and Doug Schmick, the seafood company, according to its Web site, has more than 80 restaurants that feature a menu printed twice daily with a signature "Fresh List" of 20 different varieties of fresh seafood, in addition to aged steaks, poultry, entrée salads and pasta. Piper Jaffray is serving as financial adviser to McCormick & Schmick's. -- Written by Antoine Gara in New York