CKE Sells Its Star Buffet Holdings for $12.5 Million

CKE Restaurants has sold its 37% stake in Star Buffet Inc. to the Salt Lake City buffet-restaurant chain, which was once a CKE subsidiary.

Star Buffet said Friday it paid CKE $12.5 million in cash and a note for the 2 million shares that it repurchased from Anaheim-based CKE, which created the separate company about a year ago to try to expand into the buffet-style restaurant niche.

But CKE, which operates the Carl’s Jr. and Hardee’s restaurants, among others, has decided to concentrate on its fast-food chains, said William P. Foley II, chairman and chief executive.

CKE will receive $6.25 a share for its stake, an 8.7% premium over the Friday closing price. Star Buffet closed at $5.75, up $1 a share.

Star Buffet also said its directors approved a plan to repurchase another 500,000 shares on the open market because the stock is trading at an attractive value.

The two repurchases together represent 46% of Star Buffet’s 5.45 million shares outstanding, said Chief Executive Robert Wheaton.

On June 18, the company’s shares fell 39% to $7.75 after it said earnings for its fiscal second quarter ended in August may not meet expectations because of poorly performing restaurants and small acquisitions in its Florida division.

Star Buffet’s shares are down 61% from their 52-week high of $17.25 on March 30.

Star Buffet operates buffet-style family restaurants under the names HomeTown Buffet, JB’s Restaurants, JJ North’s Grand Buffet, Stacey’s Buffet, Maggies Buffet, North’s Buffet, BuddyFreddys and Casa Bonita Mexican-theme restaurants.

CKE entered the buffet arena two years ago when it acquired Salt Lake City-based Summit Family Restaurants Inc., which operated 16 HomeTown Buffet franchised restaurants. CKE had hoped to expand that chain but lost a court battle with Buffets Inc. over rights to the HomeTown name.

CKE stock closed Friday at $31.13, up 19 cents a share.