California Pizza Kitchen Reaches $470 Million Buyout Deal

Published by: Mike Goldman on 25th May 2011 | View all blogs by Mike Goldman
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California Pizza Kitchen Reaches $470 Million Buyout Deal

California Pizza Kitchen announced on Wednesday it has reached an agreement to be acquired by a private equity firm for $470 million, finally bringing to an end a 15-month-long search for a buyer.  Golden Gate Capital has agreed to pay $18.50 a share for the restaurant chain, a price analysts say is rather low, given that it falls below the company's 52-week high stock price of $20 a share.

CPK, known for its unusual menu items like gorgonzola pizza and Korean barbecue steak tacos, is one of a handful of restaurant chains that have been put up for sale in recent months as American consumers continue to watch their spending.  Other chains currently seeking buyers include Morton's Restaurant Group, McCormick & Schmick's, and Yum Brands' A&W and Long John Silver's.

As with all restaurants, CPK has had to struggle with rising prices for commodities like cheese, meat, and produce, as well as climbing fuel costs.  The restaurant's attempt to find a buyer was hindered by declining profits and sales as it struggled to stand out to consumers with less and less discretionary income.  The company reported lower profits in early May, though they were above Wall Street estimates.

Golden Gate, the equity firm buying CPK, also owns Romano's Macaroni Grill and On the Border Mexican Grill & Cantina.

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