Investors expect low takeover offer

Article Excerpt

ED ROBIN GOURMET BURGERS INC. $5.18 is a sell. The company (Nasdaq symbol RRGB; Consumer sector; Shares outstanding: 12.9 million; Market cap: $66.8 million; No dividend paid; Takeover Target Rating: Highest; www.redrobin.com) is a casual dining chain with 556 Red Robin restaurant locations in the U.S. and Canada. About 82% of those locations are company-owned, with the rest franchised. The struggling restaurant chain has faced activist pressure from Vintage Capital Management in recent weeks. Vintage’s ownership stake in the company is 11.6%. The activist tried to buy Red Robin for $40 a share in 2019, but the company thwarted that offer with a shareholder rights plan. That move reduces the chance of a hostile bidder gaining control. Vintage has now nominated four of its representatives as directors. Meantime, Red Robin aims to move ahead with its plan to buy back more of its shares. As of December 29, 2019, the company had $70.1 million available under the current buyback authorization. The stock is now down 87% from…