Morton’s Restaurant Group to Be Sold

Morton’s Restaurant Group Inc., a struggling high-end steakhouse operator, said Wednesday that it has agreed to be acquired by New York investment firm Castle Harlan Inc. for $53 million in cash.

Morton’s and many other upscale steakhouses have fallen on tough times as business travel has plummeted and corporate expense accounts have been slashed, especially after the Sept. 11 terrorist attacks.

The New Hyde Park, N.Y., operator of 61 Morton’s of Chicago steakhouses and four Bertolini’s Authentic Trattorias eked out a profit of $990,000 last year, but that was a 90% drop from the previous year. Sales last year fell 9% to $237.1 million.

Under the terms of the deal, Morton’s stockholders would receive $12.60 for each share, a 9.1% premium over Tuesday’s closing price of $11.55 and more than a 26% premium over the average price for the last 20 trading days, the company said.

Morton’s stock jumped $1.23, nearly 11%, on news of the sale Wednesday, to close at $12.78 on the New York Stock Exchange. The deal is expected to be completed by early summer.

During the sluggish economy of the last year, the upscale steakhouse sector has been among the hardest hit in the restaurant industry. Smith & Wollensky Restaurant Group, based in New York, posted a $4.3-million loss on sales of $73 million last year, although it reported a tiny profit in the fourth quarter.

Louisiana-based Ruth’s Chris Steak House Inc., the nation’s largest high-end steakhouse with 82 restaurants, said sales were off nearly 4% last year, to $316 million. Ruth’s Chris was taken private by an equity firm in 1999.

“Unless you’ve got an expense account, you can’t afford places like Morton’s and Ruth’s Chris,” said Hal Sieling, a Carlsbad, Calif., restaurant consultant. “They’re too darn expensive.”

The average check at Morton’s is $72 per person.