SAN FRANCISCO, May 24, 2017 /PRNewswire/ -- Marcato Capital
Management LP ("Marcato"), a San
Francisco-based investment manager which manages funds that
beneficially own approximately 9.9% of the outstanding common
shares of Buffalo Wild Wings, Inc. (NASDAQ: BWLD) ("Buffalo Wild
Wings" or the "Company"), today announced that Institutional
Shareholder Services Inc. ("ISS"), the nation's leading independent
proxy advisory firm, has recommended that Buffalo Wild Wings
shareholders vote FOR the election of Marcato's
highly-qualified director nominees – Scott
Bergren, Sam Rovit and
Mick McGuire – on the WHITE
proxy card in connection with Buffalo Wild Wings' Annual Meeting on
June 2, 2017.
Mick McGuire, Managing Partner of
Marcato, said, "We are pleased that ISS recognizes further change
on Buffalo Wild Wings' Board is needed and greater shareholder
oversight would help increase Board accountability and avoid any
delays in the implementation of strategic projects. ISS's
independent recommendation further underscores our view that new
voices and fresh perspectives are urgently required in the BWLD
boardroom.
"Marcato's four highly-qualified nominees have the right
combination of operational, strategic and financial expertise
required to return the Company to a path of growth and equity value
creation. We urge shareholders to vote the WHITE proxy card
in favor of ALL FOUR of Marcato's nominees, who if elected,
pledge to work constructively with the current Board and management
team to generate meaningful, long-term value for the benefit of all
BWLD shareholders."
In making its recommendation, ISS noted*:
- "[T]he dissident – whose campaign appears to have instilled a
greater sense of urgency to the board – has presented a compelling
case that additional change is warranted at this time."
- "With the presence of McGuire, Bergren, and Rovit on the board,
the dissident will have a sufficient voice to continue to push for
appropriate changes at the company."
- "[I]ncreased shareholder oversight would be a powerful tool to
ensure that the board increases its accountability and avoids any
delays in the implementation of strategic projects. In that sense,
it appears prudent to add McGuire, who represents the company's
third largest shareholder, to the board."
- "Bergren's industry knowledge was evident in our discussion
with the nominee…the company would clearly benefit from the
operational experience of a former CEO in the casual dining space.
Moreover, his experience expanding Pizza Hut into international
markets is clearly relevant to the company's goal to continue to
build a strong presence outside the US."
ISS highlighted the ways in which Buffalo Wild Wings has "lost
its way" under the current Board:
- "[O]ver the past two years it appears that the company has lost
its way. Facing traffic problems, which were aggravated by
management's decision to pass cost increases to consumers in 2015,
the company appears to have decided in 2016 to sustain top line
growth with store acquisitions and promotional activities. As a
result of these efforts, both adjusted EBITDA margin and return on
invested capital declined over this period—the opposite of what
happened to the majority of the company's casual dining peers over
the same period."
- "Moreover, many of the recent decisions regarding board
refreshment, cost management, and capital structure optimization
(leverage management, refranchising, and buybacks) appear to have
been driven by the dissident's engagement with the company. The
dissident even hired external consultants to analyze potential cost
savings which were presented to the company approximately six
months before management announced its own cost initiatives. Though
the company blames the deterioration of fundamentals on industry
headwinds, the refreshment of more than half the board appears to
validate the dissident's concerns regarding company-specific
problems."
- "The timeline of events - particularly the company's partial
implementation of certain of the dissident's suggestions several
months after these suggestions were made, and after the dissident
announced it would nominate directors – seems to reflect a
reactionary approach by the board. Moreover, certain decisions,
such as the company's inclusion of Marcato nominee Rovit on the
management slate, come across as gamesmanship rather than a
proactive assessment of the facts and circumstances."
ISS also focused on Buffalo Wild Wings' underperformance
relative to its peers and the positive impact Marcato's campaign
has had on the Company:
- "[T]he company has recently begun to underperform, most notably
over the one-year period, in which absolute TSR was negative.
- "TSR over the one-year period through July 22, 2016 was (18.1) percent, which was 13.8
percentage points below the peer median and 22.5 percentage points
below the S&P 400 Restaurant Index. Extending the analysis
through May 18, 2017, when this
report was being prepared, the company's absolute performance
improved from (18.1) percent to (10.5) percent. As the performance
of peers and the index improved more substantially over this
period, the company's relative underperformance deteriorated to
21.0 percentage points worse than the peer median, and 35.3
percentage points worse than the index."
- "This analysis underscores the positive effect that the
dissident campaign had over the company's TSR over a period in
which the company continued to miss top line and bottom line
forecasts despite previous downward revisions made by sell-side
analysts. According to Bloomberg, from July
22, 2016 (the unaffected date), to May 18, 2017, this worsening of the company's
fundamentals drove sell-side analysts to reduce their EBITDA
expectations for 2018 and 2019 by 17.3 percent and 21.3 percent,
respectively."
Marcato encourages all BWLD shareholders to visit
www.WinningAtWildWings.com to review information about Marcato's
investment in Buffalo Wild Wings.
*Marcato has neither sought nor obtained consent from ISS to
use previously published information in this press release.
Your Vote Is
Important, No Matter How Many or How Few Shares You
Own!
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Please vote today by
telephone, via the Internet or
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by signing, dating
and returning the enclosed WHITE proxy card.
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Simply follow the
easy instructions on the WHITE proxy card.
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If you have questions
about how to vote your shares, please contact:
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INNISFREE M&A
INCORPORATED
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Shareholders May
Call Toll-free: (888) 750-5834
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Banks and Brokers
May Call Collect: (212) 750-5833
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REMEMBER:
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Please simply discard
any Yellow proxy card that you may receive from Buffalo Wild Wings.
Returning a Yellow proxy card – even if you "withhold" on the
Company's nominees – will revoke any vote you had previously
submitted on Marcato's
WHITE proxy card.
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CERTAIN INFORMATION CONCERNING THE PARTICIPANTS
FORWARD LOOKING STATEMENTS
The press release may
contain forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, as amended, which
reflect Marcato's views with respect to, among other things, future
events and financial performance. Forward-looking statements
are subject to various risks and uncertainties and
assumptions. There can be no assurance that any idea or
assumption herein is, or will be proven, correct. If one or
more of the risks or uncertainties materialize, or if Marcato's
underlying assumptions prove to be incorrect, the actual results
may vary materially from outcomes indicated by these statements.
Accordingly, forward-looking statements should not be regarded as a
representation by Marcato that the future plans, estimates or
expectations contemplated will ever be achieved.
CERTAIN INFORMATION CONCERNING THE
PARTICIPANTS
Marcato International Master Fund Ltd.
("Marcato International"), together with the other participants in
Marcato International's proxy solicitation, have filed with the
Securities and Exchange Commission (the "SEC") a definitive proxy
statement and accompanying WHITE proxy card to be used to solicit
proxies in connection with the 2017 annual meeting of shareholders
(the "Annual Meeting") of Buffalo Wild Wings, Inc. (the "Company").
Shareholders are advised to read the proxy statement and any other
documents related to the solicitation of shareholders of the
Company in connection with the Annual Meeting because they contain
important information, including information relating to the
participants in Marcato International's proxy solicitation. These
materials and other materials filed by Marcato International with
the SEC in connection with the solicitation of proxies are
available at no charge on the SEC's website at http://www.sec.gov.
The definitive proxy statement and other relevant documents filed
by Marcato International with the SEC are also available, without
charge, by directing a request to Marcato International's proxy
solicitor, Innisfree M&A Incorporated, toll-free at (888)
750-5834 (banks and brokers may call collect at (212)
750-5833).
The participants in the proxy solicitation are Marcato
International, Marcato Capital Management LP, Marcato Special
Opportunities Master Fund LP ("Marcato Special Opportunities
Fund"), Emil Lee Sanders,
Richard T. McGuire III, Sam Rovit and Scott O.
Bergren (collectively, the "Participants").
As of the date hereof, Marcato International directly owns
950,000 shares of common stock, no par value, of the Company (the
"Common Stock") and American style call options referencing an
aggregate of 615,000 shares of Common Stock representing
approximately 9.7% of the outstanding shares of Common Stock. As of
the date hereof, Marcato Special Opportunities Fund directly owns
32,600 shares of Common Stock, representing approximately 0.2% of
the outstanding shares of Common Stock.
In addition, Marcato Capital Management LP, as the investment
manager of Marcato International and Marcato Special Opportunities
Fund, may be deemed to have the shared power to vote or direct the
vote of (and the shared power to dispose or direct the disposition
of) the shares of Common Stock directly owned by Marcato
International and Marcato Special Opportunities Fund and the shares
of Common Stock underlying the call options held by Marcato
International and, therefore, may be deemed to be the beneficial
owner of such shares. By virtue of Mr. McGuire's position as the
managing partner of Marcato Capital Management LP, Mr. McGuire may
be deemed to have the shared power to vote or direct the vote of
(and the shared power to dispose or direct the disposition of) the
shares of Common Stock directly owned by Marcato International and
Marcato Special Opportunities Fund and the shares of Common Stock
underlying the call options held by Marcato International and,
therefore, Mr. McGuire may be deemed to be the beneficial owner of
such shares.
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SOURCE Marcato Capital Management LP