CKE’s Bid Deadline Nears, THL Offer Stands

PHILADELPHIA (Reuters) – CKE Restaurants Inc (CKR.N), owner of the Hardee’s and Carl’s Jr. hamburger chains, will be bought by private equity firm THL Partners [THL.UL] unless a surprise rival bid emerges in the next day.

Under the $619 million deal agreement with THL, CKE had 40 days to seek superior offers and that “go shop” provision expires on Tuesday.

Rival bidders have not yet been uncovered, sources familiar with the matter said, although a last minute bid from any unknown suitor could still theoretically be lodged.

Such “go shop” provisions often fail to turn up superior bids. In a study of 108 deals with “go shop” provisions since 2004, only 8.3 percent found a higher offer within the go shop window, while 13.9 percent found one eventually, FactSet MergerMetrics said.

The THL deal values CKE at $11.05 per share, which is slightly below its Monday closing stock price of $11.09 per share.

Sales at CKE’s Carl’s Jr. chain — known for its Six Dollar Burger — have been hit hard by unemployment in California, where the jobless rate topped 12 percent in December.

While sales at larger fast-food chains such as McDonald’s Corp (MCD.N) and Burger King Holding Inc (BKC.N) have held up relatively well during the recession with the help of discounted menus, CKE and others have taken a sales hit as consumers looked to save money by eating at home more often.

CKE posted a 4.1 percent drop in sales for the period ended March 22. Its year-to-date sales fell 4.2 percent.

The THL deal includes a relatively high level of equity — $440 million, which also includes fees and transaction costs, a source close to the deal previously said. Total financing for the deal adds up to $575 million, the source said.

Private equity firms have shown greater interest in quick service restaurants in recent months. Earlier this month, privately held Papa Murphy’s, known for its take ‘n’ bake pizzas, said it was being bought by private equity firm Lee Equity Partners for an undisclosed amount.

(Reporting by Jessica Hall; additional reporting by Megan Davies in New York; editing by Andre Grenon)