In the wake of its proposed $620 million sale to a new ownership group, Denny’s is facing shareholder lawsuits, claiming the company didn’t share enough information about the ins and outs of the agreement.
Denny’s shared the news in an SEC filing on Monday.
In early November, the casual-dining chain announced that it would be taken private and sold to TriArtisan Capital Advisors, investment firm Treville Capital Group, and Denny’s franchisee Yadav Enterprises. TriArtian first approached Denny’s with interest, prompting the restaurant company to evaluate strategic alternatives and contact dozens of other buyers. Denny’s decided the two investment firms and Yadav was the best path forward.
The investors, who sued in New York state in December, want more clarity on financial projections used in the deal, whether any company insiders had conflicts of interest, how the deal process unfolded over time, and how Truist Securities—the financial advisor to Denny’s Board of Directors during the sales process—determined the deal was fair.
The lawsuits ask the court to stop the deal from going through.
In the filing, Denny’s also said other shareholders sent letters raising similar disclosure concerns and warning they might sue as well.
The breakfast giant said in the filing that it disagrees with the claims and that it doesn’t believe its earlier disclosures were lacking. However, the brand chose to provide extra information anyway to avoid ongoing legal costs and uncertainty before the January 13 vote when stockholders are scheduled to meet and approve or reject the proposed transaction.
To respond to the concerns, Denny’s added more background on how the sale process unfolded, including earlier offers from TriArtisan, how negotiations changed over time, and how many other potential buyers were contacted. The company also shared more financial detail, such as updated management projections and the valuation work performed by Truist Securities.
Denny’s emphasizes in the filing that it believes the lawsuits are without merit and that the added disclosures should not be viewed as an admission that anything was missing before. The extra details, the company states, were provided to give stockholders additional context as they prepare to vote on the proposed take-private transaction.
