La Pizza Loca Offers to Buy Chicago Pizza for $12.8 Million
La Pizza Loca Inc., one of Orange County’s largest Latino-owned companies, made an unsolicited bid late Monday to buy Chicago Pizza & Brewery Inc. in Mission Viejo.
La Pizza’s $2 a share cash offer for the parent of BJ’s Pizza & Grill values the company at $12.8 million, a 28% premium over Monday’s close of $1.56.
Chicago Pizza shares rose 13 cents Tuesday, to $1.69, before trading was halted on the Nasdaq.
Alex Meruelo, chief executive of the privately held Buena Park-based La Pizza, said he made the bid because “there are a lot of synergies between both companies.” He declined to comment further.
Meruelo, who began buying Chicago Pizza shares in July, owns about 7% of the company and virtually all of La Pizza.
Chicago Pizza said Tuesday that its board will appoint an independent committee today to consider the proposal.
The company said it is not seeking purchase offers and that it recently rejected an unsolicited merger offer from a company it declined to identify.
Paul Motenko, Chicago Pizza’s chief executive, said Tuesday that the company’s board hadn’t had a chance to review La Pizza’s offer. Motenko and chief operating officer Jerry Hennessy have a 22% stake in the company.
Under terms of the offer, La Pizza would buy all Chicago Pizza shares not owned by Meruelo, Motenko or Hennessy. Motenko and Hennessy would then exchange their shares for stock in the combined companies.
“To make it very clear, we certainly have not agreed to that, nor have we ever discussed it with them,” Motenko said. “That’s just part of his proposal.”
La Pizza would fund the acquisition using $500,000 in cash plus borrowings on its credit line, the company said in a Securities and Exchange Commission filing.
Chicago Pizza has been improving its operations this year, posting two consecutive quarterly profits after losing money in the two previous quarters.
The company earned $1.8 million, or 29 cents a share profit, in the third quarter ended Sept. 30, a 10-fold increase from a year earlier. Sales rose 13% to $8.16 million. The company has about $2.5 million in long-term debt, Motenko said.
Meruelo opened his first pizza restaurant in 1986 in Huntington Park. He built a chain of 52 outlets with more than $25 million in annual sales, serving Latino enclaves throughout Southern California. Last year, Hispanic Business magazine listed La Pizza Loca as Orange County’s top-grossing Latino company.
BJ’s Chicago Pizzeria was founded 20 years ago by Bill Cunningham and Mike Phillips and became known for its deep-dish pizza.
Motenko and Hennessy started managing the company in 1991 and bought it four years later. They expanded the company’s menu and changed the name to BJ’s Pizza & Grill to reflect the growing options on the menu. Later, they opened some BJ’s with breweries and gave those larger outlets the name Chicago Pizza, Grill & Brewery.
The company went public at $5 a share in October 1996. Chicago Pizza’s stock price has fallen about 13% this year.
The company has 27 restaurants--including 10 Pietro eateries--most of them in Southern California. The company has said it plans to open two to four new restaurants annually on the West Coast in the coming years.
