California Pizza Kitchen reportedly up for sale
Are the co-founders of California Pizza Kitchen looking to call it quits?
The L.A.-based designer-pizza chain has put itself up for sale, the Wall Street Journal reported Friday, citing unidentified sources.
The report sent the company’s stock soaring in the last few minutes of trading on Nasdaq. The shares closed up $2.56, or 14%, to $20.74, the best price since the stock’s all-time high of $24.62 in 2007.
CPK, founded 25 years ago by two former criminal defense attorneys, has 253 restaurants nationwide and in nine countries overseas, and also sells it pizzas in supermarkets.The Journal said the company was soliciting interest from potential buyers including private-equity firms. That doesn’t mean a sale will happen, but it’s a start. CPK’s stock market value is about $500 million; the chain has little debt.
Company officials couldn’t be reached for comment about the sale speculation.
One question is whether the company’s founders and co-CEOs, 67-year-old Larry Flax and 64-year-old Rick Rosenfield, are hoping to cash out -- or whether they’re looking for a deep-pocketed buyer to help expand the business with the two of them still in charge. Combined, they own 7.8% of CPK’s shares.
Flax and Rosenfield, both attorneys who shared a love of cooking, launched the first CPK restaurant in 1985 in Beverly Hills adjacent to their law office.
They sold a controlling stake to PepsiCo Inc. in 1992 but remained at the helm. Pepsi then sold the chain to a private equity firm in 1998, and Flax and Rosenfield stepped aside from day-to-day operations. CPK went public in 2000.
The founders returned to take charge in 2003 at the request of the company’s board after the chain began to struggle from over-expansion -- a recurring theme with CPK.Sales hit a record $677 million in 2008, but the firm has never been a big moneymaker for shareholders. Earnings, which peaked at $21 million in 2006, plunged to $4.6 million last year, including one-time charges.
The company's stock is no higher now than it was within a few months of its IPO in 2000.
With takeover activity rising as the economy recovers, CPK may be picking an opportune time to shop itself. Another Southland-based restaurant chain, Carl’s Jr. and Hardee’s parent CKE Restaurants Inc., in February agreed to a $620-million takeover offer from private-equity firm Thomas H. Lee Partners.
On Wednesday CKE’s board said it received a competing offer that might be better than Lee’s bid. The stock surged 6.6% on Wednesday and continuing rising on Thursday and Friday, posting a gain for the week of 9%, to end at $12.11 a share.
-- Tom Petruno
Photo: Rick Rosenfield, left, and Larry Flax. Credit: Allen J. Schaben / Los Angeles Times