Filer: Landry's Seafood Restaurants, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
Subject Company: Rainforest Cafe, Inc.
Commission File No.: 000-27366
LANDRY'S SEAFOOD RESTAURANTS, INC.
ANNOUNCES AGREEMENT TO ACQUIRE RAINFOREST CAFE
HOUSTON, TEXAS (FEBRUARY 9, 2000)
ANNOUNCEMENT OF THE MERGER
Landry's Seafood Restaurants, Inc. ("LNY"/NYSE) announced today the signing
of a definitive merger agreement to acquire Rainforest Cafe, Inc.
("RAIN"/NASDAQ), for approximately $125 million to be paid by Landry's in a
combination of common stock (65%) and cash (35%) (based on an assumed value
of $9.00 per share of Landry's common stock) or a current value of
approximately $5.54 per Rainforest share based on today's closing price of
Landry's stock. The transaction has an initial value of $125 million, or
$5.23 per Rainforest share (based on an assumed value of $9.00 per share of
Landry's common stock). However, the transaction value to the Rainforest
shareholder will increase or decrease depending upon changes in Landry's
stock price.
ABOUT RAINFOREST CAFE
Rainforest Cafe opened its first domestic restaurant in 1994 in the Mall of
America in Minneapolis, Minnesota, and went public shortly thereafter. The
Company accelerated its expansion and opened seven restaurants in 1997 and
eight restaurants in 1998. The Rainforest Cafe's international expansion
started with the first unit in London, England in 1997. Presently,
Rainforest Cafe operates 28 domestic restaurants and licenses 10
international Rainforest Cafe's in six countries ( including, Canada,
France, China , Mexico, and the United Kingdom). The company has sought to
differentiate itself by providing high quality, freshly prepared food and
offering proprietary retail merchandise in a rain forest themed restaurant.
Rainforest Cafe is a highly visually and audibly exciting concept. There is
no practical comparison to other "poorly concepted" themed venues. The
company's restaurants appeal to a broad base of customers and are typically
located in high profile locations. In fact, six of the company's 28
restaurants are "Icon" properties that, in 1999, averaged revenues of over
$15 million per Icon unit, with stable sales trends. Also, the Company
operates an additional 22 restaurants, with average sales of $6 to $7
million per year. In addition, Rainforest Cafe is in a strong financial
position with no debt and approximately $37 million in cash and
investments. Rainforest Cafe plans to open two additional Icon units in
2000 in San Francisco's Fisherman's Wharf and at Downtown Disney at the
Disneyland Resort in Anaheim, opening the end of 2000. Rainforest Cafe
received the Nation's Restaurant News "Hot Concept" award in 1997 and
routinely receives national and international recognition for its
innovations and food quality.
ABOUT LANDRY'S SEAFOOD RESTAURANTS, INC.
Landry's is the second largest and fastest growing casual-dining seafood
restaurant chain in the United States. With over 150 restaurants in 30
states, Landry's has been one of the preeminent restaurant growth stocks
since becoming a public company in 1993. The Company plans to open 15 to 16
new restaurants in 2000. Landry's operates its seafood restaurants under
several brand names, including the industry leading Joe's Crab Shack
restaurant, Landry's Seafood House division and the Crab House restaurants.
Landry's also is the developer and operator of the Kemah Boardwalk in
Houston, Texas. This project is a 40-acre development, largely owned in fee
simple by Landry's, that includes eight Landry's restaurants, an upscale
hotel, multiple retail shops, amusement attractions, plazas, fountains, and
a 450-slip marina. The entire project and its businesses are owned and
operated by Landry's.
The Company's latest restaurant innovation is the Aquarium - an underwater
dining adventure . The 25,000 square foot restaurant includes 100,000
gallons of aquariums in a highly themed "underwater" environment. Landry's
is presently evaluating locations for an additional 1 to 2 Aquarium
restaurants per year.
WHY LANDRY'S ASKED FOR THE MERGER
Landry's Seafood Restaurants, Inc. contacted Rainforest Cafe subsequent to
the announcement of other proposed merger talks. With Rainforest
management's consent, Landry's has performed several weeks of due diligence
on Rainforest Cafe's business. Based upon this review and pre-existing
knowledge, Landry's believes the following:
1. Rainforest Cafe has developed a nationally and internationally
recognized brand name and restaurant concept with only 38 total
restaurants (domestic and international franchised).
2. The creative and innovative forces in both Companies will create
a dynamic and powerful element in the restaurant industry.
The Rainforest Cafe theme restaurant is superior to other less successful
"theme" restaurants. Landry's believes that the Rainforest Cafe concept
includes elements that create ongoing and continued consumer interest, and
continued purpose for existence. However, Landry's further believes
opportunities exist to improve Rainforest Cafe's menu strategy and
execution - including food pricing points, food style and mix.
Rainforest Cafe's original unit in the Mall of America and at least five
other Icon restaurants operate at extremely high volumes with relatively
stable revenues. Nearly all of the Rainforest Cafe units currently generate
positive cash flow and based upon the purchase price will grant an
acceptable return on investment.
WHY RAINFOREST AGREED TO BE ACQUIRED
Rainforest Cafe's current corporate executive management, who will resign
with the closing of the merger, agree that:
1. There are over 100 small-cap public restaurant companies most of
which probably should not be separate public companies.
Institutional investor sentiment seems to currently favor larger
capitalized companies that can provide greater investment
liquidity and slower, more stable growth. Size does matter, and a
merger with Landry's can create a large, well- capitalized upper
tier restaurant company. The combined companies should trade at a
market cap within the top 25% of all food service company, improve
market liquidity and increase average trading volumes for both
companies' shareholders.
2. Landry's management and personnel have experienced rapid growth
and the relevant "growth pains" that are a frequent result. The
company has seen that Landry's operations are performing very well
and that the financial trends are significantly positive.
Rainforest Cafe's management believes that the Rainforest Cafe
concept could draw on Landry's 20 years of strong restaurant and
general business acumen and expertise, particularly the drive of
the Company's executive management, notably Gilman J. Fortuity,
Chairman of the Board, President and Chief Executive Officer of
Landry's. The Rainforest Cafe concept could effectively utilize
such leadership.
3. The combined companies could effectively achieve substantial
synergies of efforts and costs.
4. Rainforest Cafe's operational personnel, with oversight by
Landry's executives, will seek to make moderate food and
operational changes to increase guest frequency and trial, and
increase top of the mind awareness (i.e., increased advertising
and marketing of the Rainforest Cafe concept.)
5. The merger of the two companies will eliminate the pressure to
grow the Rainforest Cafe concept while the operations executives
focus on the 38 existing restaurant operations.
Mr. Lyle Berman, Chairman of Rainforest Cafe, said, "I have personally
known the Landry's management team since we started the Rainforest Cafe
concept. Through our business dealings over the years and from watching the
growth of the Landry's chain of, restaurants, I have developed the utmost
respect for Gilman J. Fortuity as a restaurant operator, businessman and as
the leader of a public company. As a result of my faith in his leadership
and others in his organization, I am confident this is the team to take
Rainforest Cafe to the next level."
DESCRIPTION OF THE MERGED COMPANIES
Upon the merger of Landry's and Rainforest, there will be no changes in the
executive officers or directors of Landry's and the company will have over
22,000 employees in 30 states. The combined companies expect to achieve in
2000 combined revenues of approximately $750 million on a pro forma full
year basis and EBITDA of nearly $90 million. Landry's management expects
the merger to close by May 1, 2000 and to be accretive to 2000 earnings by
up to $0.05 per share.
TECHNICAL DESCRIPTION OF THE MERGER
Under the terms of the Merger Agreement, Rainforest Cafe will be merged
with a subsidiary of Landry's thereby becoming a wholly-owned subsidiary of
Landry's. The purchase method of accounting will be used for the merger. In
the merger, each share of Rainforest stock will be converted, at the
shareholder's election, into the right to receive $5.23 in cash, or .5816
shares of Landry's common stock for each Rainforest common share
outstanding, subject to mandatory proration, so that as a result of the
transaction, 65% of Rainforest shares will be converted into Landry's stock
and the remaining 35% into cash. Landry's will issue approximately
9,028,000 common shares and pay $43,750,000 in cash for all of the
outstanding stock of Rainforest.
In connection with the merger, Lyle Berman and Steven Schussler, major
shareholders of Rainforest holding 7.8% and 2.8% of Rainforest's
outstanding shares, respectively, have entered into agreements with
Landry's to, among other things, vote their shares in favor of the
transaction. Lyle Berman, Kenneth W. Brimmer, Steven W. Schussler, and
Ercument Ucan, the Chairman of the Board/Chief Executive Officer,
President, Senior Vice President - Development, and Senior Vice President -
Retail, of Rainforest, respectively, have entered into employee
termination, consulting and non-competition agreements with Landry's.
The transaction is subject to customary conditions including, among others,
approval of Rainforest's shareholders and regulatory approvals and
consents.
Investors and security holders are advised to read the proxy
statement/prospectus regarding the business combination transaction
referenced in the foregoing information, when it becomes available, because
it will contain important information. The proxy statement/prospectus will
be filed with the Securities and Exchange Commission by Rainforest and
Landry's. Investors and security holders may obtain a free copy of the
proxy statement/prospectus (when available) and other documents filed by
Rainforest and Landry's with the Commission at the Commission's web site at
www.sec.gov. The proxy statement/prospectus and such other documents may
also be obtained from Landry's by directing such request to Landry's
Seafood Restaurants, Inc., 1400 Post Oak Blvd., Suite 1010, Houston, Texas
77056, Attention: Investor Relations, telephone 713/850-1010, e-mail
[email protected].
This release contains certain forward-looking statements within the meaning
of Section 27A of the Securities Act, and Section 21 E of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), which are intended
to be covered by the safe harbors created thereby. Investors are cautioned
that all forward-looking statements involve risks and uncertainty,
including without limitation, changes in restaurant sales and development
plans, changes in costs of food, labor, development and employee benefits,
conditions beyond the Company's control such as weather or natural
disasters, as well as general market conditions, competition, pricing,
employee turnover, and the timing of opening of new restaurants. In
addition, there is no assurance that the proposed acquisition will actually
be consummated, and if consummated, whether management will be able to
smoothly integrate Rainforest operations and business, or whether store
sales declines of Rainforest can be mitigated to maintain the Company's
existing business and achieve reasonable financial results. Although the
Company believes that the assumptions underlying the forward-looking
statements contained herein are reasonable, any of the assumptions could be
inaccurate, and therefore, there can be no assurance that the
forward-looking statements included in this report will prove to be
accurate. In light of the significant uncertainties inherent in the
forward-looking statements included herein, the inclusion of such
information should not be regarded as a representation by the Company or
any other person that the objectives and plans of the Company will be
achieved. The Company does not expect to update forward-looking statements
continually as conditions change.
CONTACT: GILMAN J. FORTUITY OR PAUL S. WEST
PRESIDENT AND C.E.O. VICE PRESIDENT--FINANCE AND C.F.O.
(713) 850-1010 (713) 850-1010
