December 6, 2018 / 1:58 AM / 10 days ago

Del Frisco's adopts poison pill as activist investor pushes for sale

(Reuters) - Del Frisco’s Restaurant Group Inc (DFRG.O) adopted a shareholder rights plan, or “poison pill”, with a 10 percent trigger on Wednesday to counter activist investor Engaged Capital, which is pushing for its sale.

If the rights are triggered, all shareholders other than any triggering person will be entitled to buy common shares at a 50 percent discount, or the company may exchange each right held by such holders for one share of common stock, Del Frisco’s said in a statement.

The rights plan will expire on Dec. 4, 2019, it said.

Engaged Capital, which owns a 9.99 percent stake in the company, on Thursday urged the restaurant operator to explore strategic alternatives, including a sale.

The activist hedge fund believes that Del Frisco’s, a steak house restaurant chain operator, is poorly managing its restaurants and rushed into buying two chains to avoid an acquisition. The Wall Street Journal on Wednesday reported the activist investor’s push for sale.

In June, Del Frisco’s acquired Barteca Restaurant Group for $325 million in cash.

Del Frisco’s, which owns Eagle Steak House and Frisco’s Grille chains, has missed Wall Street sales estimates for six out of the last eight quarters, according to Refinitiv data, and its same-store sales have fallen in the past two years.

Reporting by Nivedita Balu and Bhargav Acharya in Bengaluru; Editing by Gopakumar Warrier and James Emmanuel

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