NEW YORK, May 25 (Reuters) – California Pizza Kitchen Inc agreed on Wednesday to be acquired by private equity firm Golden Gate Capital for $470 million, more than a year after its hunt for a buyer began.
The sale price of $18.50 a share was less than some investors had expected and fell short of the stock’s 52-week high of $20.
Still, the company said the price represented a 32 percent premium to the 30-day average price of the stock prior to the search for a buyer, and a 10.7 percent premium to Tuesday’s closing stock price.
California Pizza shares rose 9.9 percent in Wednesday morning trading to $18.37 on Nasdaq. The auction had dragged on since February 2010.
The company, which offers unusual items like Korean barbecue steak tacos and pear and gorgonzola pizzas, was one of several restaurant chains up for sale at a time when consumers are still cautious about spending.
Other chains currently on the block include McCormick and Schmick’s, Morton’s Restaurant Group Inc and YUM Brands Inc’s Long John Silver’ and A&W All-American Food.
Like many other restaurant chains, California Pizza is grappling with higher costs for commodities like cheese and produce, and fuel costs.
Its auction also was hurt as the company faced falling profits and sales, competition from other restaurant chains up for sale, and the difficulty differentiating itself at a time when consumers had become more selective in how to spend their disposable income.
Earlier this month, California Pizza said first-quarter profit fell, but the results topped Wall Street expectations as cost controls and higher-margin menu items offset lower sales.
The company, also known as CPK, has been revamping its menu to lower labor costs and focus on more profitable items.
California Pizza forecast 2011 earnings of 20 cents to 21 cents per share on full-service same-restaurant sales that are flat to up 1 percent.
Moelis & Co served as the exclusive financial adviser to California Pizza.
Golden Gate’s other restaurant investments have included Romano’s Macaroni Grill and On The Border Mexican Grill & Cantina.
(Reporting by Jessica Hall; editing by Gerald E. McCormick and John Wallace)