TW Services Rejects Sweetened Coniston Offer

Times Staff Writer

The company that owns Denny’s coffee shops and El Pollo Loco restaurants on Thursday rejected a sweetened $29-a-share bid by a New York investment firm.

This is the second time in a month that TW Services, which also owns 42% of Winchell’s Donut Houses and operates 400 Hardee’s restaurants, has rebuffed a bid by Coniston Partners. Last month, TW rejected as inadequate a $28-a-share offer by Coniston, which already owns 19.1% of the food service company, for the remainder of the firm.

Once again, TW’s board found Coniston’s most recent bid--valued at about $1.4 billion--to be insufficient and urged its shareholders to hold onto their stock. Coniston is seeking 15.8 million shares, which would have given it a controlling 51% interest in TW.

‘Choke Off’ Investment


The investment firm said it would later acquire the remaining shares.

Coniston partner Paul Tierney described the most recent TW response as “audacious” and said his firm will continue its offer, which expires Nov. 28.

In a letter to shareholders, TW chairman Frank L. Salizzoni criticized the offer as “highly conditional” and one “that could result in the forced sale of core assets and could choke off needed ongoing investment.”

Salizzoni pointed out that Coniston in the past has tended to buy substantial stakes in companies and then force management to restructure in order to boost stock prices. “At worst,” he said of the offer, “it is an attempt to coerce the company into taking steps which would produce substantial, short-term profits for Coniston on its block of shares.”


Coniston has said its offer would not burden TW with debt and that it intended to keep TW’s food service businesses. “They have no basis to question our intentions,” said Tierney, who stated that TW officials have refused to negotiate. “It’s a rock solid commitment to purchase the business.”

He noted that Coniston’s offer is conditioned on TW revoking its so-called poison pill anti-takeover defense, which would make an acquisition much more expensive.