Brazil Fast Food Company, $BOBS, Taken Private Offer Voted Down By Shareholders

Brazil Fast Food Company, $BOBS, Taken Private Offer Voted Down By Shareholders

Thanks to Brian for the heads up this morning and sending me a link for the following news this morning as I was getting my daughter ready for her newborn appointment. Emphasis is mine.


RIO DE JANEIRO, Nov 20, 2013 (BUSINESS WIRE) — Brazil Fast Food Corp. (otc markets:BOBS) (the “Company”), the second largest fast-food restaurant chain in Brazil with 1,085 points of sale, today announced that the investor group (the “Investor Group”) has withdrawn its offer to acquire all outstanding shares of the Company not owned by the Investor Group. The offer was for US$15.50 per share in cash under a merger agreement with the Company. That merger agreement was terminated by the Investor Group this morning following a Company stockholder meeting at which an insufficient number of stockholders voted in favor of the proposal.

In its termination letter to the Company, the Investor Group stated, “We continue to believe that the $15.50 price recommended by the special committee of the board of directors was a fair price, as the independent directors and their financial advisor had determined. In our view, that price became even more attractive since the merger agreement was signed on September 27 because, among other reasons, the Brazilian Real has further depreciated since that time. The unaffiliated stockholders, however, have determined to remain invested in the Company which we take as a vote of confidence in the Company’s prospects even in light of the increasingly challenging Brazilian market conditions.”

No breakup fee is to be paid in connection with the termination of the proposal.

About Brazil Fast Food Corp.

Brazil Fast Food Corp., through its holding company in Brazil, BFFC do Brasil Participacoes Ltda. (“BFFC do Brasil”, formerly 22N Participacoes Ltda.), and its subsidiaries, manage one of the largest food service groups in Brazil and franchise units in Angola and Chile. Operating under (i) the Bob’s brand, (ii) the Yoggi brand, (iii) KFC and Pizza Hut Sao Paulo, as franchisee of Yum! Brands Brazil, and (iv) Doggis, as master franchisee of Gastronomia & Negocios S.A. (former Grupo de Empresas Doggis S.A.), our subsidiaries are Venbo Comercio de Alimentos Ltda. (“Venbo”), LM Comercio de Alimentos Ltda. (“LM”), PCN Comercio de Alimentos Ltda. (“PCN”), CFK Comercio de Alimentos Ltda. (“CFK”, former Clematis Industria e Comercio de Alimentos e Participacoes Ltda.), CFK Sao Paulo Comercio de Alimentos Ltda. (“CFK SP”), MPSC Comercio de Alimentos Ltda. (“MPSC”), FCK Comercio de Alimentos Ltda. (“FCK”, former Suprilog Logistica Ltda.), DGS Comercio de Alimentos Ltda. (“DGS”), Yoggi do Brasil Ltda. (“Yoggi”), Schott Comercio de Alimentos Ltda. (“Schott”), Little Boss Comercio de Alimentos Ltda. (“Little Boss”), CLFL Comercio de Alimentos Ltda. (“CLFL”) and Internacional Restaurantes do Brasil S.A. (“IRB”). IRB has 40% of its capital held by Mascali Participacoes Ltda., another Brazilian limited liability company, whose main partner is the CEO of IRB.

Safe Harbor Statement

This press release contains forward-looking statements within the meanings of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended, and within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve known or unknown risks, uncertainties and other factors that may cause the actual results to differ materially from those expressed or implied by such forward looking statements. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see the disclosures in the Company’s financial reports, including the risk factors contained in the Company’s most recent annual report and quarterly reports available on its website

SOURCE: Brazil Fast Food Corp.

Great news of course for all BOBS shareholders as that offer of $15.50 a share was ridiculously low as was outlined many places and talked about on this blog here and here.

Thank you to everyone who voted no to the offer and everyone who I have been in contact with over the last several weeks as this offer was considered.  Thanks to all of you concerned shareholders we were able to vote down the offer and keep a hold of this massively undervalued and growing company for at least a little while longer.

I was asked this morning if I think the BOBS insiders would seek any kind of “revenge” against minority shareholders in the near future.  I do think that with this no vote does come some downside for us remaining shareholders.  Being a bit of a cynic, especially after something like this has happened, I do think that the next several quarters earnings and growth will be lower than they have been in recent quarters.  Possibly artificially lower due to management wanting to get the companies price lower so they can attempt another buy out at a lower price, or because of the real problems that are going on in Brazil, even if management in my estimation overstated some of the concerns going on there.  I also expect that if the insiders do attempt to take the company private again that they are not likely to give minority shareholders the same benefit of “Outside” shareholders having the only votes on the matter like they did this time.

In any case I plan to hold onto my BOBS shares for the time being and if I am right and the share price drops for any issues, real or manufactured, everything remaining the same I will just buy more shares of the company.

Congratulations and thank you to everyone, but I am preparing for a bit of a bumpy ride at least in the short-term as a BOBS shareholder.