CKE to Weigh Objections to Summit Takeover Plan
CKE Restaurants Inc. will abandon its plans to acquire Summit Restaurants Inc. if a significant number of the Salt Lake City-based company’s shareholders object to the deal, said William P. Foley II, CKE’s chairman and chief executive.
Speaking at CKE’s annual meeting Wednesday at the Irvine Marriott, Foley said that he hopes to complete the previously announced deal that would give CKE Restaurants control over 124 restaurants that Summit operates in Western states.
CKE, the Anaheim-based parent of the Carl’s Jr. burger chain, in April acquired 946,714 shares of convertible stock that represents about 17% of Summit’s outstanding common shares. CKE received two seats on Summit’s board of directors.
CKE also offered to swap a combination of CKE stock and cash valued at just more than $30 million for the remainder of Summit’s common stock, but a group that holds about 15% of Summit’s shares says CKE’s bid is too low.
Foley said that Securities and Exchange Commission rules governing dissenting shareholders would make the proposed acquisition too expensive if more than 10% of Summit’s stockholders exercise their right to dissent. If that happens, Foley said, CKE would most likely keep its 17% Summit stake and use its two seats on the board to help guide a restructuring of the restaurant company.