Hungry Tiger to be Acquired by W. R. Grace : Conglomerate Offers $23 Million for Chain
W. R. Grace & Co. agreed Friday to buy Hungry Tiger Inc., a Van Nuys-based seafood chain plagued by three consecutive unprofitable quarters, in a transaction worth $23 million.
The two companies announced an agreement in principle for Grace, a New York-based conglomerate, to trade 0.16092 share of its stock for each of Hungry Tiger’s 3.26 million shares outstanding.
Based on Friday’s closing prices, Hungry Tiger stockholders would receive securities worth $7.02 a share, a 25% premium, for each of their shares of the restaurant chain. Hungry Tiger’s stock, traded over the counter, closed at $5.63, up 88 cents, while Grace closed on the New York Stock Exchange at $43.63, down 50 cents. The merger announcement was made after the markets closed.
If the deal goes through, Grace also would have the option of buying 700,000 of the Hungry Tiger shares--those held by certain directors--for $7 each in cash rather than swapping stock for them.
The deal is subject to approvals by the boards and shareholders of both companies.
Match ‘Makes Sense’
Grace executives could not be reached for comment, but Michael Mueller, an analyst with Montgomery Securities in San Francisco, said the match makes sense.
Hungry Tiger, he said, has excellent locations, but some of its restaurants need remodeling, and its poor showing in recent years has left it unable to afford the work. Grace, on the other hand, has the financial muscle and management expertise to exploit Hungry Tiger’s assets and infuse some much-needed capital, Mueller said.
Grace is already deeply involved in the restaurant business. Its 770 eateries include the El Torito chain, Houlihan’s Old Place, Charley Brown’s, Reuben’s, Coco’s, Carrow’s, Del Taco and Taco Villa.
Just last month, Grace agreed to acquire 52 more restaurants from General Mills, and, in fact, Hungry Tiger President Vincent Kikugawa served as executive vice president of Far West Services, a Grace restaurant division, from October, 1981, to March, 1982, according to a Hungry Tiger proxy statement.
Didn’t Approach Grace
But Hungry Tiger Vice President Ida Vander Poorte said her company did not approach Grace and was not on the market.
“Grace came to us,” she said. “It sounded like a good deal.”
Founded in 1962, Hungry Tiger operates 40 restaurants under several different names, including Hungry Tiger and The Breakers Seafood Co. Most are in Southern California, including three at the Los Angeles Music Center, but others are in Northern California, Arizona and Nevada.
Hungry Tiger’s locations are its biggest strength, according to Mueller, who said several, such as those at the Music Center and along the water in Malibu and Santa Barbara, are “one of a kind.”
