Shares of Del Frisco’s Restaurant Group (NASDAQ:DFRG), operator of Del Frisco’s Double Eagle Steakhouse, Del Frisco’s Grille and Sullivan’s Steakhouse, plunged in afternoon trade after missing on its first-quarter profit and revealing its intention to acquire Barteca Restaurant Group for US$325mln in cash.
In the first piece of news, the restaurant chain posted net income of $400,000, or US$0.02 per share, compared with US$3.3mln, or US$0.14, in the year-ago quarter.
With the exclusion of items on an adjusted basis, its earnings amounted to US$0.10, which fell way short of Wall Street’s estimate of US$0.19.
There was a rosy spot, as revenue climbed 6.5% to US$89.3mln, which whizzed past the consensus estimate of US$88.4mln.
But in late afternoon trade, shares in Del Frisco were down 8.3% to US$15.55.
Barteca deal tough to chew on
Its second announcement is the acquisition of Barteca, a two-decade-old Spanish Restaurant Group that owns Barcelona, an upmarket tapas restaurant, and Bartaco, a less formal South American street food establishment.
The takeover represents an attempt by Del Frisco’s to widen its repertoire beyond steakhouses and woo customers interested in different sorts of food.
But the price to acquire Barteca exceeds Del Frisco's market cap, which now hovers around US$300.1mln after today's decline.
The company’s board approved the takeover of Barteca, which is expected to be completed by second quarter’s close, subject to closing conditions.
Based in Irving, Texas, Del Frisco currently boasts more than 50 restaurants across 23 states and Washington D.C.