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Nathan's Famous Inc. Message Board

  • stockguy246 stockguy246 Dec 13, 2011 8:26 PM Flag

    Prob good idea not to Tender

    Guys, this is just the start of the management buyout. The stock will be going much higher. I would recommend holding out from the tender. Wouldn't be surprised if this gets to above $30. Also, the buyout will happen before 2014, as that is when the SMG contract expires.

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    • Today was the last day of the buy.
      Or will they extent it??????????????
      Jan.12.
      Yes I'm in,
      Dr.John.

    • Float looks nice, shorts will be squeezed.

    • I'm not a shareholder and have never been one. A friend showed me the annual report a few days ago and I read it with great interest as I know the company and the industry from other points of view. Current management seems on the right path and my guess is that if they could rid themselves of operating the 4 or 5 old stores they would. By the way, while I know the unit in Coney Island and the one on Central Avenue I have no idea where the others are. Over the last 40 years they had very busy units that they ran in the Times Square area and on 8th Street and Sixth Avenue. Neither lasted. My guess is that they just cannot be run successfully over a long period of time. Also, people who run such high volume all cash businesses shouldn't be public companies as it wouldn't shock me to find a good deal of cash not being reported...........though as a public company management surely cannot do that. SO, what would I do? Hmmm.

    • I agree with your points. But you won't be a shareholder by the time they buy the manufacturer because the company will already have been taken private in a management buyout - so it's not worth worrying about.

    • can you explain the SMG situation? i know there was litigation in the past, but what does SMG mean to NATH now?

      • 1 Reply to christmasfern
      • See below straight from the 10-K. SMG produces hot dogs, puts Nathan's label on them, and then sells them to grocery stores. Per below, Nathan's receives between a 3-5% royalty (let's assume the midpoint of 4%) from SMG's sales. Per below, Nathan's receives about $4MM in royalties from SMG, implying that SMG is selling $100MM (4/.04) of hot dogs to grocery stores. The contract expires in February of 2014. It is known that the current contract is below market rates, and Nathan's currently has a very unfavorable deal (which is why they've been desperately trying to get out of it). When they finally do get out of it in February 2014, they should be getting 6-7% royalties instead of 3-5%. If we assume SMG, will continue selling $100MM of hot dogs, this would be $6-7MM of royalties instead of $4MM. This would add another $2-3MM of EBITDA, which is a 20-30% increase from current levels!

        From 10-K: We license SMG, Inc. and its affiliates (collectively, “SMG”) to produce packaged hot dogs and other beef products according to Nathan’s proprietary recipes and spice formulations, and to use “Nathan’s Famous” and related trademarks to sell these products on an exclusive basis in the United States to supermarkets, club stores and grocery stores. The supply/license agreement with SMG (the “License Agreement”) provides for royalties ranging between 3% and 5% of sales. The percentage varies based on sales volume, with escalating annual minimum royalties. Earned royalties of approximately $3,907,000 in fiscal 201

 
NATH
50.72-0.27(-0.53%)Jul 22 4:00 PMEDT

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