TW Services Turns Down Coniston Bid

The company that owns Denny’s coffee shops, Hardee’s hamburger chain and El Pollo Loco restaurants on Wednesday rejected a takeover offer made by a New York investment firm.

The board of TW Services, which also owns the Canteen food service firm and 42% of Winchell’s Donut Houses, dismissed as “inadequate” a takeover bid made by Coniston Partners, whose offer was valued at $1.3 billion. A TW official said the company would not comment beyond a brief statement announcing the board’s decision.

Coniston, which disclosed last month that it had purchased 19% of TW stock, said it is still interested in pursuing its bid.

“We remain committed to trying to buy the company,” said Gus Oliver, a Coniston general partner. “We are continuing to explore our options. We have not made any decision yet as what the next step would be.”

Coniston is offering $28 a share--or $1.1 billion--for the 39.27 million TW shares it does not already own. Coniston paid an average of $19 a share--or $176.2 million--for the 9.28 million shares purchased during several days in September. The group says it plans to keep TW’s food businesses intact.

TW, which purchased Denny’s for $850 million 13 months ago, has made it known it wants to remain independent and has adopted tough anti-takeover measures. As a result, analysts say it would be difficult to take the company over without management’s blessing.

On the New York Stock Exchange on Wednesday, TW shares slipped 12.5 cents to close at $26.50. The price was below Coniston’s $28-a-share offer, indicating that investors were skeptical about the success of the group’s offer, analysts said.

However, Lloyd Rixe, a securities analyst at D. A. Davidson & Co., a Montana brokerage firm, said he expected both companies to continue talking. TW’s rejection of the Coniston offer, he said, “could be the begining of additional conversations between the two companies. I’m not sure this is the end.”