The largest shareholder and most vocal critic of J. Alexander's says the restaurant chain's board should hit the reset button on its sale negotiations and level the playing field for bidders to compete with chosen buyer Fidelity National Financial.
In their latest missive to directors Townes Duncan, Brenda Rector and Joe Steakley, Privet Fund managers Ryan Levenson and Ben Rosenzweig say the recent bids by two unidentified suitors — both have placed per-share offers higher than Fidelity National's $13-per-share offer — should remind the board members of their fiduciary duties to accept the best offer if all other conditions are equal.
"Should certain members of the Board or its advisors believe that there is any credible rationale for obstructing the competitive process and/or delivering to shareholders any less than the maximum consideration that a robust auction would yield, we remain committed to closely scrutinizing such justification," Levenson and Rosenzweig wrote.
The Privet managers, who own 10 percent of J. Alexander's shares, say the board has been favoring Fidelity National during the sale process and left money on the table when it stopped treating the so-called Party F and Party G as "excluded parties." (Read their entire letter here.) They also contend that Chairman and CEO Lonnie Stout and investment bank Cary Street Partners are conflicted in their roles and have offered "vague and insincere excuses" in defending the company's recommendation that shareholders accept Fidelity National's tender offer.
"Do not rely on representatives and advisors who we believe to be burdened with conflicts," the Privet managers wrote. "Though the current auction may be accidental, there is no reason that it cannot be successful."
Shares of J. Alexander's (Ticker: JAX) closed Wednesday trading at $14.40, 15 cents higher than Party F's latest offer.