Del Frisco's Restaurant Group: Looking Like A Buyout - most expensive restaurant dishes in the world

I believe the acquisition of DFRG (DFRG)
Any day can be announced, so I will speed up the review of the reason why the stock transaction is so low and why the acquisition is very likely.
The rumors today are worth reading here and here to get a quick idea of what makes the stock so positive.
Prior to the announcement of a major acquisition, DFRG shares were traded at $16 per share in early 2018.
DFRG announced the acquisition of Barteca Restaurant Group for $325.
At that time, DFRG had about 20 outstanding shares, and its own EV was about $350 (
Minimum debt of about $25 m prior to acquisition).
Obviously, for a company that has only $325 in electric vehicles, the $350 acquisition is a huge and risky one.
The idea behind the acquisition is great.
DFRG is known for its Del Friscos double eagle and Grille steakhouse. These are high-
Double Eagle restaurant is one of the highest high-end brands in the United States, with an average check of more than $120, and the average volume per restaurant is less than $14 per year.
Barteca features two growth concepts, Bartaco and Barcelona, serving Mexican and Spanish dishes in the fast casual dining area.
Bartaco's average check is $23 and Barcelona's average check is $34.
The reasons for the acquisition are found here and very logical.
Barteca is the second restaurant growth concept if I tell you, only Shake Shak (SHAK)
DFRG purchased the company at an annualized EBITDA runtime rate of 2018 and you would say it was a deal.
The above is the reality seen in the acquisition demonstration.
The place where the wheels fall off is that the company failed to get financing properly before it rushed to buy.
Entering a hedge fund and working on capital, he scolds DFRG while taking a 10% position at an average of $6. 80 per share.
The argument to participate in capital is more true than the argument that DFRG destroys shareholder value because the company guarantees an expensive debt (
More than $300, almost 9% interest)
And issued a large number of shares, $8 per share, to fund the acquisition.
Keep in mind that the stock traded at $16 prior to the acquisition and DFRG itself was in the open market for the past 12 months to repurchase the stock per share for $13 to $20.
Acquisition financing is a disaster.
The engagement seized the opportunity to acquire shares while instigating the sale.
DFRG initially responded with the poison pill clause and gave up the clause within 3 months.
At the same time, DFRG and Engaged signed a cooperation agreement to make Engaged the nominee of the board.
Engaged agreed to provide the terms of suspension through the 2019 Annual Meeting to be held on May 30 so that they could support the company.
Ten days before that meeting, "coincidentally," We are now getting rumors about the acquisition.
Shares plunged below $5, and if the company's sale is not fulfilled, the engagement may immediately open to change.
While taking a stand, there is also a fund, the armistice fund, which has accumulated nearly 20% of the shares issued.
Just last week, public market purchases continued in the armistice agreement.
Due to the continued decline in average levels, the base of the armistice appears to be slightly higher than $8 per share.
The two aggressive funds control nearly 30% of the shares and hold them for less than 12 months at a price of just under $7 a share and $8 a share, respectively.
Why is Buyout elya going through the message board quickly, Twitter shows a complete lack of information about DFRG and its valuation.
The company has few followers, with a market capitalization of $160 as of last week, overall below the radar of most investors.
That's why the acquisition is possible and should happen at least $9 per share: the last acquisition
Avai said there was a fire in a place where there was smoke.
We have a buyout rumor that 30% of the shares are controlled by two hedge funds, and we will hold an annual meeting on May 30 to close the suspension agreement with a hedge fund.
That hedge fund (Engaged)
This is actually an insider, probably inside news that is not bought in the open market.
Another fund, the armistice fund, continued to increase its stake after receiving about £ 6 for £ 2.
4 m in the last 5 months.
Although the share price fell nearly 75% before the acquisition of Barteca, no insider trading was conducted by management or the board.
If these insiders have insider information, they will not be able to buy and stop buying because their ownership shares are so low.
Prior to the acquisition of Barteca, the same group was also very active in buying shares (ouchy! ).
I wouldn't be surprised to wake up in the next 10 days and see DFRG sold in whole or in part.
The benefit of doing this is that we have a very good idea that Barteca is worth $325 as this is what DFRG just paid less than a year ago and the company continues to increase the restaurant (i.
Develop business and create value).
According to the market cap before Barteca's acquisition, the double eagle and Grille brands are worth more than $300.
Engaged noted in his activist letter that they believe the acquisition of Barteca is defensive because DFRG may be acquired by another company.
Similarly, according to the pre-acquisition price of Barteca, assuming a modest acquisition premium, this will make it possible that the value of the existing DFRG brand will exceed $350.
It is expected to take out $9 to $10 per share, which is a kind of theft for long-term investors, very bad.
But for short-term investors like funds that now almost control DFRG, it could be a quick payday.
Over the past 6 months, with a brief surge in interest from 1 million shares to 20% of all, it can be interesting and profitable at the same time.
I am/We are long DFRG.
This article was written by myself and expressed my views.
I received no compensation (
In addition to Seeking Alpha).
I have no business relationship with any stock company mentioned in this article.