- Red Robin reached an agreement on March 26 with Vintage Capital and Kahn Capital Management, which collectively own about 11.6% of the company’s stock, according to an SEC filing.
- Under the agreement, Red Robin has appointed a new independent director to the board of directors, Anthony Ackil, who is expected to stand for election at the company’s 2020 and 2021 annual stockholder meetings. The board will temporarily have 11 members as Director Stuart Oran previously said he will not stand for reelection during the 2020 annual meeting.
- Additionally, the Vintage Parties will be allowed to acquire up to 20% of the company's common stock without being deemed an acquiring person under the company’s rights agreement.
A nearly year-long fight with Vintage Capital appears to have come to an end. The dispute began last June when the shareholder began increasing its stake in the company from 8.5% to 11.6%. Red Robin then issued a poison pill to protect the company from a takeover bid. That didn’t stop Vintage Capital from increasing pressure on the casual dining chain, which saw its market capitalization drop from $1.3 billion in 2015 to about $400 million in 2019. This decrease in value is part of a larger trend of declining sales and traffic that has been hitting casual dining chains over the last few years.
Vintage Capital also made an unsolicited bid for the company in July and wanted five directors to be removed from the board, only to receive a rebuke from the restaurant company in September. At the same time, Red Robin hired Paul J.B. Murphy II as CEO after being without a permanent top executive since Denny Marie Post’s retirement last spring.
With four previously appointed board members, the company has now brought on five new board members and set up a clear turnaround plan for 2020, which included expanding its Donatos Pizza test to additional restaurants, trimming its menu, boosting beverage sales and turning to branded delivery efforts.
While this will end this dispute with Vintage Capital, it is certainly not out of the woods thanks to the novel coronavirus. The company has suspended its rollout of its Donatos partnership and temporarily closed its dine-in operations. It continues to provide to-go, delivery and catering, and its off-premise sales have more than doubled over the past two weeks compared to before the pandemic, according to a press release.
The crisis certainly hasn’t helped the company’s market capitalization, which is at $110 million as of April 1, so it could see additional investor pressures depending on how quickly it is able to bounce back once the threat of the pandemic is over.