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Red Robin's stock soars toward biggest-ever one-day gain; co. responds to activist calls for strategic review

Tomi Kilgore

Shares of Red Robin Gourmet Burgers Inc. rocketed 31.1% in afternoon trading, putting them on course for the biggest one-day gain since the burger chain went public in July 2002, after an activist investor said it was prepared to launch a buyout bid. Earlier, Vintage Capital Management LLC, Red Robin's third-largest shareholder, urged the company to pursue strategic alternatives, including a potential sale, and was prepared to bid $40 a share in an auction for the company's shares. Vintage said it has explained to the Red Robin's board "on a number of occasions" that it hoped to collaborate on recruiting an "A+" operator to fill the chief executive role. Red Robin responded to Vintage by saying it was "surprised by the content of the letter" since Red Robin had expressed its openness to Vintage's participation in its search for a CEO, but Vintage has so far not been willing to propose any candidates. The company added that it remained open to all opportunities to create value, and would "of course consider any bona fide offer" made by Vintage to buy the company. Red Robin's stock was still down 37% over the past 12 months while the Dow Jones Industrial Average has gained 3.4%.