J. Alexander's could be a tasty takeover target $JAX
www.yetanothervalueblog.com
Last month, J. Alexander’s (JAX; disclosure: long) received an unsolicited buyout offer at $11.75/share from their third largest shareholder, Ancora. I think the buyout offer is the first step to JAX selling themselves for a large premium to today’s price of $10.35, though I think it’s an open question whether the sale process will be orchestrated by the current board or a new, more shareholder friendly board. Either way, I think JAX is undervalued as a standalone company and likely to be sold at a nice premium in the near future. A quick overview: JAX is a tiny restaurant group. They operate 46 restaurants, mainly under the J. Alexander, Stoney River, and Redlands Grill names and mainly on the East Coast. All of their brands are relatively upscale restaurants: Stoney River is a steakhouse with an average check size of >$40, and J. Alexander and Redlands are upscale “contemporary American” restaurants with average check sizes >$30. Just to give you an idea of where that check size puts them in the quality / cost bucket compared to some more well-known restaurants, both Outback and Cheesecake Factory have average check sizes in the low $20s, while Ruth’s Chris Steakhouse average check size is ~$85/person. That’s probably enough of an overview. It’s a restaurant company; I’m sure most of you are familiar with the general concept! So let’s move on to more interesting waters. My goal is for you to walk away from this post with three key takeaways:
J. Alexander's could be a tasty takeover target $JAX
J. Alexander's could be a tasty takeover…
J. Alexander's could be a tasty takeover target $JAX
Last month, J. Alexander’s (JAX; disclosure: long) received an unsolicited buyout offer at $11.75/share from their third largest shareholder, Ancora. I think the buyout offer is the first step to JAX selling themselves for a large premium to today’s price of $10.35, though I think it’s an open question whether the sale process will be orchestrated by the current board or a new, more shareholder friendly board. Either way, I think JAX is undervalued as a standalone company and likely to be sold at a nice premium in the near future. A quick overview: JAX is a tiny restaurant group. They operate 46 restaurants, mainly under the J. Alexander, Stoney River, and Redlands Grill names and mainly on the East Coast. All of their brands are relatively upscale restaurants: Stoney River is a steakhouse with an average check size of >$40, and J. Alexander and Redlands are upscale “contemporary American” restaurants with average check sizes >$30. Just to give you an idea of where that check size puts them in the quality / cost bucket compared to some more well-known restaurants, both Outback and Cheesecake Factory have average check sizes in the low $20s, while Ruth’s Chris Steakhouse average check size is ~$85/person. That’s probably enough of an overview. It’s a restaurant company; I’m sure most of you are familiar with the general concept! So let’s move on to more interesting waters. My goal is for you to walk away from this post with three key takeaways: