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Former CEO of Church's Makes Offer to Buy Chain

May 05, 1987|From Times Wire Services

SAN ANTONIO — Church's Fried Chicken, which has been the subject of takeover speculation in recent months, received a buyout offer valuing the company at about $469 million, the nation's second-largest fast-food chicken operation said Monday.

The San Antonio-based concern received the offer from a private investment group that includes Church's former president and chief executive, Richard F. Sherman. Sherman resigned his positions in February after announcing an interest in buying Church's.

The group also includes C. Stephen Lynn, chief executive of privately held Sonic Industries of Oklahoma City, Okla., who also announced in February that he and other investors were interested in buying the company.

Sonic is a franchiser of more than 900 fast-food restaurants featuring 1950s-style curb service. Sonic went private in 1986 in a leveraged buyout by Lynn and other members of management.

Church's, which is second to Kentucky Fried Chicken Corp. in size, said the investment group also includes Stanley Faye, who was previously the company's legal counsel, Shearson Lehman Bros. Holdings, and Citicorp Capital Investors Ltd.

Church's said in a statement Monday that it has taken no position on the proposal but that its board of directors will consider it.

Church's stock closed up 1 1/8 at 11 3/4 on the New York Stock Exchange.

The group offered cash to acquire two-thirds of Church's common stock at $12.25 per share. Following a merger between the companies, the group would acquire each remaining share for $8.50 in cash and $3.75 liquidation value of redeemable preferred stock in the new company.

Church's has about 38.3 million common shares outstanding.

Church's said the proposal was subject to obtaining commitments for a substantial part of the financing needed by the new company. The company also said the offer was contingent on Church's agreeing to pay the new company's financing commitment fees and other expenses if the new company did not consummate the merger.

When Church's held talks with Lynn's group in February, analysts believed a buyout offer of about $520 million was discussed. However, no formal bid was made public. Earlier, Church's had considered a number of alternatives, including a management-led leveraged buyout.

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