The
Steak n Shake Company and
Western Sizzlin Corporation Sign Merger
Agreement
Western
Sizzlin Corporation Declares a Special
Dividend Payable to Western Sizzlin
Stockholders
in the Form of Shares of Steak n Shake
INDIANAPOLIS
and ROANOKE, Va., Oct. 22 /PRNewswire-FirstCall/ -- The Steak n Shake Company
("SNS") (NYSE: SNS), and Western
Sizzlin Corporation ("Western") (Nasdaq: WEST), today jointly
announced that they had executed an agreement for a wholly-owned subsidiary of
Steak n Shake to merge with and into Western. Western has also declared a
special dividend payable to Western stockholders in the form of 1,322,806 shares
of Steak n Shake common stock presently beneficially owned by an investment
subsidiary of Western. Together, the dividend and (if and when completed) the
merger are estimated to have an aggregate transaction value (in principal amount
of Steak n Shake debentures and market value of Steak n Shake stock) to
Western's stockholders of approximately $38.8 million, or $13.67 per Western
share, based on 2,840,384 shares of Western outstanding as of October 22, 2009
and the closing price of Steak n Shake common stock on October 22, 2009. The
market price of Steak n Shake's common stock will fluctuate before the special
dividend payable to Western stockholders is distributed.
The
merger agreement currently provides for Steak n Shake to issue and deliver to
Western stockholders subordinated debentures of Steak n Shake with a principal
amount of $22,959,000, subject to adjustment as provided in the merger agreement
and discussed below. At the effective time of the merger, each share of
Western's common stock would be converted into the right to receive debentures
in principal amount equal to approximately $8.08 per share. The aggregate and
per share amounts of debentures to be issued to Western stockholders are subject
to reduction on account of certain potential tax contingencies that could arise
in connection with the Western special dividend that will be resolved as of the
date of distribution of that dividend. The Steak n Shake debentures will have a
term of five years from the effective date of the merger, will bear interest at
the rate of 14 percent per annum and will be pre-payable without penalty at the
option of Steak n Shake after one year from the date of issuance.
The
merger agreement was negotiated between special committees of the boards of
directors of both companies, both of which were composed entirely of independent
directors. Closing of the merger transaction is subject to satisfaction (or
waiver) by the parties of certain conditions, including approval by Western's
stockholders. The dividend is not conditioned upon the completion of the merger
and is payable to stockholders of record as of November 2, 2009, regardless of
whether they are also stockholders of record of Western as of the effective time
of the merger.
B. Riley
& Co., LLC is acting as financial advisor to the special committee of the
Western board of directors in connection with the merger, and has provided a
fairness opinion to the Western special committee. Duff & Phelps, LLC is
acting as financial advisor to the special committee of the Steak n Shake board
of directors in connection with the merger, and has provided a fairness opinion
to the Steak n Shake special committee.
As
contemplated by the merger agreement, Western's Board of Directors on October
22, 2009, declared a dividend to Western stockholders of all 1,322,806 shares of
common stock of Steak n Shake that it presently beneficially owns. Each
stockholder of Western of record as of November 2, 2009, will be entitled to
receive the special dividend, which will be distributed on November 6, 2009. The
dividend will be payable at the rate of approximately 0.4657 shares of Steak n
Shake common stock for each share of Western outstanding as of the record date,
with any fractional share interests to be settled by a cash payment, indicating
a per share dividend value (valuing Steak n Shake at $12.00, its closing price
on October 22, 2009) of $5.59 per Western share.
ADDITIONAL
INFORMATION CONCERNING THE TRANSACTION
Steak n
Shake plans to file a registration statement and related transaction statement
on Schedule 13E-3 with the Securities and Exchange Commission (the "SEC") with
respect to the merger. The registration statement will include Western's proxy
statement for the special meeting of its stockholders to consider the merger and
Steak n Shake's prospectus with respect to the debentures. INVESTORS AND
SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT AND PROXY
STATEMENT/PROSPECTUS CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT STEAK N SHAKE, WESTERN, THE TRANSACTION AND
RELATED MATTERS. Investors will be able to obtain free copies of the
registration statement and proxy statement/prospectus, when available, and other
documents filed by Steak n Shake and Western with the SEC through the SEC's web
site at www.sec.gov. In
addition, Western stockholders will be able to obtain free copies of the
registration statement, proxy statement/prospectus and transaction statement,
when available, from Western by directing such requests to Western, attention:
Investor Relations, 401 Albemarle Ave SE, Roanoke, Virginia 24013, telephone at
(540) 345-3195.
PARTICIPANTS
IN THE SOLICITATION
Steak n
Shake, Western and Western's directors and officers may be deemed to be
participants in the solicitation of proxies from Western's stockholders in
connection with the proposed merger involving Western and Steak n Shake.
Information regarding Western's directors and officers and a description of
their interests in Western is contained in Western's definitive proxy statement
on Schedule 14A with respect to its 2009 Annual Meeting of Stockholders, which
was filed with the SEC on July 15, 2009, and will also be contained in the proxy
statement/prospectus relating to the proposed merger when it becomes available.
Western's stockholders may obtain additional information about the direct and
indirect interests of the participants in the acquisition, by security holdings
or otherwise, by reading the proxy statement/prospectus and other materials to
be filed with the SEC when such information becomes available.
RISKS
ASSOCIATED WITH FORWARD-LOOKING STATEMENTS
This news
release contains "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 and other federal securities laws and
are intended to be covered by the safe harbors created thereby. These statements
are based on current expectations and are subject to a number of risks and
uncertainties that could cause actual results to differ markedly from those
projected or discussed here. Steak n Shake and Western caution readers not to
place undue reliance upon any such forward-looking statements, for actual
results may differ materially from expectations. Neither company undertakes to
publicly update or revise any forward-looking statements even if experience or
future changes make it clear that any projected results expressed or implied
will not be realized. Further information concerning the types of factors that
could impact the companies' businesses can be found in their filings with the
SEC.
ABOUT THE
STEAK N SHAKE COMPANY
Steak n
Shake is a holding company. Its primary restaurant operation is conducted
through Steak n Shake Operations Inc. The Steak n Shake restaurant chain,
founded in 1934, is a classic American brand serving premium burgers and
milkshakes through its chain of 485 restaurants.
ABOUT
WESTERN SIZZLIN CORPORATION
Western
Sizzlin Corporation is a holding company which owns a number of subsidiaries,
with its primary business activities conducted through Western Sizzlin Franchise
Corporation and Western Sizzlin Stores, Inc, which franchise and operate
restaurants.