Buffalo Wild Wings’ $2.9B Sale to Arby’s Threatened by Suit

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By Jacob Rund

Buffalo Wild Wings Inc. is facing a would-be shareholder class action that could block the company’s $2.9 billion sale to Arby’s Restaurant Group Inc.

The complaint, filed Jan. 5 in the U.S. District Court for the District of Minnesota, alleges Buffalo Wild Wings and its nine-member board misrepresented the value of its go-private deal in a proxy statement issued to stockholders.

Buffalo Wild Wings shareholder Brian Pascual is asking the court to either stop the companies from proceeding with the merger, or award damages if the sale does become final. He also seeks to prevent next month’s shareholder vote on the deal, at least until Buffalo Wild Wings discloses the information that it allegedly left out of the proxy statement.

A Buffalo Wild Wings spokesperson declined to comment on the lawsuit, citing the company’s policy not to publicly discuss pending litigation.

Deal Announced in November

Minneapolis-based Buffalo Wild Wings announced the deal on Nov. 28, saying its stockholders would receive $157 in cash for each of their shares—$11 more per share than the stock’s closing price the day before. The $2.9 billion sticker price includes the assumption of about $500 million of Buffalo Wild Wings’ outstanding debt.

According to the complaint, the offer is “unfair and inadequate” as it is less than the value of the company’s common stock when prospects for future earnings are included. “It appears that Buffalo Wild Wings is well-positioned for financial growth and that the merger consideration fails to adequately compensate the company’s shareholders,” the complaint said.

The lawsuit claims the analysis included in the proxy statement from Goldman Sachs & Co., Buffalo Wild Wings’ financial adviser, doesn’t disclose the value of the company’s long-term debt. It also said Goldman didn’t divulge enough details of the comparison it conducted with similarly situated restaurant chain owners to determine whether the deal is fair to shareholders.

Buffalo Wild Wings and its board members “were, at the very least, negligent in preparing and reviewing the proxy,” the complaint said.

Pascual wants Buffalo Wild Wings to provide stockholders with the information he says was left out of the filing. He also wants the company to disclose the work Goldman has done for both it and Arby’s and the fees it received in return.

Pascual is represented by Russell M. Spence Jr. of Hellmuth & Johnson PLLC.

The case is Pascual v. Buffalo Wild Wings Inc. , D. Minn., No. 0:18-cv-00047, complaint filed 1/5/18 .

To contact the reporter on this story: Jacob Rund at jrund@bloomberglaw.com

To contact the editor responsible for this story: Yin Wilczek at ywilczek@bloomberglaw.com

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