Parent of Denny’s Rejected Earlier Lower, Offer : Coniston Launches Bid to Control TW Services

An investor group Thursday launched an unsolicited, $456.8-million tender offer for control of TW Services Inc., the New York-based parent of the Denny’s restaurant chain and other food-services concerns.

Coniston Partners, a New York investment partnership, offered $29 a share for up to 15.8 million TW shares. If the offer is successful, Coniston, which already owns 9.3 million TW shares, would gain a controlling 51% of TW’s outstanding shares.

Earlier this month, Coniston proposed to buy TW Services for $28 a share. But two weeks ago, the firm’s board of directors rejected the bid as inadequate.

The latest offer was announced after the stock markets had closed. Earlier, TW’s stock closed unchanged, at $25 a share, in heavy trading on the New York Stock Exchange, with about 1.6 million shares changing hands.

Jerome J. Richardson, TW’s president, said in a telephone interview from his Spartanburg, S.C., home that he talked to one of Coniston’s partners, Paul Tierney Jr., earlier Thursday and promised him that TW’s board “would have a meeting soon and we would be back in touch.”

“We have a legal obligation to create the largest value for our shareholders,” Richardson said.

Coniston said it intends eventually to buy all of TW’s stock for $29 a share, which would value TW at $1.4 billion overall. But Coniston said it is forced to simply gain a majority of stock because of an anti-takeover law in Delaware, where TW is incorporated. Coniston said it also filed suit in federal court in Delaware seeking to block the law from coming into play in this deal.

The law prohibits a hostile suitor who buys 15% of a company’s stock from completing a takeover for three years, unless it immediately gets approval from stockholders who hold 85% of the company’s total shares--excluding those held by the suitor.

Thus, purchasing a majority stake would help Coniston win such an election, or perhaps gain control of TW’s board, which could vote to exempt the company from the Delaware law.

TW bought La Mirada-based Denny’s, which operates 1,200 restaurants nationwide, a year ago. TW also owns the El Pollo Loco restaurant chain and 42% of Winchell’s Donut Houses, and is a major franchisee of Hardee’s fast-food restaurants. In the first nine months of this year, TW earned $49.7 million on revenue of $2.6 billion.