All some private equity group has to do is buy their 9.9% of JACK's outstanding shares, at the current price of say below $21., then turn around and tender for all shares at $24. At such point probably two White Knights surface, my suspicion being that YUM is one of them and if so that would be a stock transaction probably in the $30. area. If not a YUM, then some other party comes in with back and forth bidding likely ending around $27.50 as the company is forced to go along with the deal. The private equity people make a cool $35. million, at least, on about a six month turnaround of capital. If they should get the company at a net cost of less than $24. after that theoretical tender, they have themselves one heck of a turnaround situation plus the exciting possibilities at Qdoba. This is entirely feasible for any pro player with the slightest bit of savvy and moxie. I know they have the cash and can move with dispatch. This scenario may be what is initiating right today, November 23, 2010. I like all this volume currently below $21. which may indicate that already something is afoot. The company is simply much too vulnerable at this point to a takeover and would have to acquiesce to an aggressive bidder. Recessions have a way of forcing peoples' hands, and I am conciliatory myself as a shareholder about tendering my shares even though I had a longer term price objective in mind for JACK. Big J in L.A.
In Big J's defense: He makes some excellent points and there absolutely is value in the JACK franchise and Qdoba. That the company has been mismanaged is a given. The menu also needs focus (although they sell the hell out of those 99cent tacos). The stores have been upgraded and the weaklings weeded out so some good things are happening. Unfortunately, the company is highly leveraged to the Calif. economy and that is showing few signs of really turning around. This company has perennially disappointed and will be dead money for some time. Likely to be under pressure through year end as asset managers will want it off the books for the quarterly report. Still, they have a strong franchise with lots of stores and good name recognition. This is not easy to duplicate. With extensive private equity involvement in the space, it is only a matter of time until one of the big players recognizes the value and makes a run at the company. New management, new focus and a new menu will go a long way to boost the stock price. I wouldn't add to the position here but it is worth a "hold".
What color is the sky in your world? Here on the blue sky planet, JACK is in SERIOUS trouble and is being shunned not courted as a takeover candidate.
Fantasize all you want about multiple suitors and tender offers but unless Jack gets its comparable stores sales headed north, Jack's box will be pine and the only people reading the 10Q will be bankruptcy attorneys.