California Pizza Considers Sale as Results Improve
California Pizza Kitchen Inc. said it is reviewing options including a possible sale and reported preliminary first-quarter earnings that beat its forecast. The shares gained 2% in morning Nasdaq trading.
Alternatives may include a sale, merger or changes to the company’s capital structure, the Los Angeles-based restaurant chain said today in a statement. Moelis & Co. is advising the company, which has 253 company-owned stores and franchises.
The shares jumped 14% on the Nasdaq Stock Market on Friday after the Wall Street Journal reported the restaurant chain had approached potential buyers, including private-equity firms. Wine offerings and a menu of smaller portions helped comparable-sales exceed the company’s predictions, co-Chief Executive Officers Rick Rosenfield and Larry Flax said in a separate statement.
“Casual dining was an attractive area for private equity firms before the recession and it could be that interest is coming back,” Ian Corydon, an analyst with B. Riley & Co., said in a telephone interview. “Because the business is recovering the risk perception has improved quite a bit.”
California Pizza Kitchen climbed 42 cents to $21.16 at 10:41 a.m. New York time in Nasdaq trading, extending last week’s advance and valuing the company at $514 million.
The company was founded in 1985 by Flax and Rosenfeld, two former federal prosecutors who gave up a joint law practice to sell pizzas with toppings like barbecue chicken and shrimp.
PepsiCo Inc. acquired a controlling stake in the company in 1992, and sold it to New York-based private equity firm Bruckmann, Rosser, Sherrill & Co. in 1997. The chain went public in 2000. In 2003, Flax and Rosenfield reassumed management as co-CEOs.
Earnings in the quarter ended April 4 may total 10 cents a share, California Pizza Kitchen said. In February, the company had projected earnings of at most 7 cents a share. Comparable- store sales fell about 2.7%, compared with a 5.9% decrease in the year-earlier period.