Equity Firm to Buy Sizzler Parent

The Sherman Oaks-based owner of the Sizzler dining chain, Worldwide Restaurant Concepts Inc., said Friday that it agreed to be purchased by an Australian investment firm for about $210 million in cash.

The $7-a-share offer from Sydney-based Pacific Equity Partners was 42% higher than Thursday’s closing price for Worldwide’s stock and double the shares’ value Dec. 7, the day before the company said it might be looking for a buyer.

In heavy trading Friday, Worldwide’s stock jumped $1.37, or 28%, to a 10-year high of $6.29 on the New York Stock Exchange.

“It would appear to be a price well in excess of what Wall Street was anticipating, as indicated by the stock’s action today,� said David Leibowitz, a managing director at Burnham Securities.

Under the agreement, the price paid by Pacific Equity will increase, to as high as $7.25 a share, if the Australian dollar rises significantly in value against the U.S. dollar. The price will fall to as low as $6.65 a share if the Australian currency declines sharply. The deal is expected to close by late summer or early fall.

Worldwide said its shareholders must still approve the sale of the company.

Worldwide operates or franchises 306 Sizzler restaurants in the United States, Australia, Asia and Latin America and recently opened two units in China. It also owns 22 Pat & Oscar’s eateries in Southern California and operates 112 KFC restaurants in the Australian state of Queensland.

The proposed sale would cap a recovery effort by the company formerly known as Sizzler International Inc., which has struggled for years in an increasingly competitive restaurant industry. In 1996, the company filed for bankruptcy protection, and shuttered some Sizzler units.

In 2000, an E. coli outbreak hit two Wisconsin Sizzlers, resulting in the death of one child and sickening dozens. Then in late 2003, another E. coli outbreak hit, this time at Pat & Oscar’s outlets in Orange and San Diego counties.

But the company, buoyed by strong performance at its Australian restaurants and a strong recovery at the Pat & Oscar’s chain, reported net income of $3.9 million in its fiscal third quarter ended Feb. 6, reversing a net loss of $700,000 a year earlier. Although revenue from its U.S. Sizzler units fell as restaurants in New York were closed to focus on the California market, sales at units open at least a year inched up. The company recently has been remodeling its Sizzler chain and updating the menus.

The first Sizzler Family Steak House opened in 1958 in a converted trailer in Culver City. Sizzler went public in 1970, and the 1980s marked a period of expansion.

Pacific Equity is a private equity firm that focuses on buyouts and typically acquires established companies that operate principally in Australia and New Zealand, according to its website. The firm has investments in industries such as health care, marketing, and book stores.

Executives at Pacific Equity couldn’t be reached for comment.