Casual dining chain Red Robin Gourmet Burgers Inc may have put itself on private equity's M&A menu by agreeing to amend its takeover defences and consider any offers — as demanded by two of its biggest shareholders.
A private equity buyout looks more probable, given the brand's niche positioning in the restaurant space. Its "Project RED" attempts to turn around the concept could take time, deterring strategic buyers, analysts and investors said.
"Right now, the stock is really cheap and the valuation is very depressed, which is exactly the kind of scenario a private equity investor would take advantage of," said Broadview Advisors analyst Faraz Farzam.
"A strategic buyer might not be interested in Red Robin as it has a lot to fix … that's certainly a lower possibility," he added.
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