Waking up Landry's directors

Mar 17, 2008 7:40 PM

by Ray Poirier | Frustrated shareholders are trying to light a fire under the directors of Landry’s Restaurants Inc. (LNY) who have been sitting around for two months without taking action on a $1.3 billion buyout bid from company chairman and CEO Tilman Fertitta.

In January, Fertitta, who saw that Wall Street failed to recognize the value of his restructured company, offered to acquire 69% of the outstanding shares that he didn’t already own for $23.50 per share in cash.

At the time, the shares had fallen to the $16 level, thus the offer provided a premium of some 40% to shareholders.

Immediately, investors reacted by causing a substantial spike in the share price, pushing it about the $21 level.

The board of directors said they would set up a committee to review the bid. And then, nothing.

Time passed and still nothing.

Observers believed that with a dearth of interest in mergers and acquisitions because of the credit crisis, there must be a banker or two available to gladly accept a fee to evaluate Fertitta’s bid.

Now, the board faces a pair of class-action lawsuits filed by shareholders who are getting tired of waiting. They note that there haven’t been any competing bids since Fertitta made his offer.

Does anyone remember that prior to the credit crunch, Riviera Holdings Corp. (RIV) shareholders were offered $34 a share, a bid that was never acted on by company management? Shares now trade under $20 apiece.