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Steak n Shake, Western Sizzlin to Merge

From Sarah E.  Lockyer, Nation's Restaurant News: Steak 'n Shake Co. and Western Sizzlin Corp., two restaurant companies led by one-time activist investor Sardar Biglari, plan to merge, with Western Sizzlin set to become a subsidiary of Steak n Shake, the companies said Thursday.

The net transaction value payable to Western Sizzlin shareholders is about $23 million. The deal still is subject to shareholder approval, and neither company had filed as of press time any deal materials or proxy information.

Steak n Shake, based here, operates or franchises 486 family-dining restaurants that together tally systemwide sales of about $700 million. Western Sizzlin, based in Roanoke, Va., operates or franchises 105 steak buffet restaurants and boasts systemwide sales of $200 million.

In a statement, the companies said the letter of intent to merge calls for Western Sizzlin to distribute to its stockholders all of its Steak n Shake shares, which total a 5.4-percent stake. At the merger’s closing, each share of Western’s common stock would be converted into the right to receive an amount equal to $8.11 in the principal amount of debentures, or unsecured debt, issued by Steak n Shake. It is anticipated that Steak n Shake’s debt will hold a term of five years, will hold a 14-percent interest rate and will be pre-payable without penalty after one year from the date of issuance.

Biglari, who swept into the restaurant industry starting in 2006 with investments at such companies as Steak n Shake, Friendly Ice Cream, Applebee’s and Western Sizzlin, is the chairman and chief executive at both Steak n Shake and Western Sizzlin. He has worked with both companies for more than a year to close underperforming locations, increase shareholder value and drive customer traffic.

Western Sizzlin’s latest quarter ended June 30 included earnings of $1.9 million, or 68 cents per share, versus a loss of $2.0 million, or 72 cents per share, in the same quarter a year earlier. Revenue fell 2.5 percent to $4.4 million. Same-store sales at franchised locations, which make up the majority of the chain, fell 4.4 percent. Full Story 
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