Buffalo Wild Wings, Inc. (NASDAQ:BWLD) today recommended that
shareholders vote on the YELLOW proxy card in connection with the
Company's upcoming 2017 Annual Meeting of Shareholders ("Annual
Meeting") to be held on June 2, 2017.
The Company reminds shareholders that it has sent several letters
containing important information about the Annual Meeting and provided
investors with a thorough presentation on the issues raised by Marcato
Capital Management, L.P. ("Marcato") and Marcato's nominees for the
Board. Those materials are available at http://www.buffalowildwings.com/en/2017-annual-meeting/.
The Company believes there are numerous reasons for shareholders to
support the Company's nominees on the yellow proxy card. Among the most
1. Buffalo Wild Wings has been extremely successful,
generating annualized returns of approximately 24% for shareholders
since its IPO and outperforming its casual dining peers on important
metrics, including customer traffic, sales growth and margins, amid
challenging market conditions and shifting demographics and consumer
In its report, Institutional Shareholder Services Inc. ("ISS")
recognized that, "The current management
team has certainly delivered impressive results since the company's
IPO in 2003, growing revenues from $126 million in 2003
to $1,987 million in 2016." In more recent periods, ISS noted
that Buffalo Wild Wings had put up "strong numbers since 2011." ISS
continued, "The company has strongly
outperformed peers and the index since its IPO."
Glass Lewis & Co., LLC ("Glass Lewis") stated, "[W]e find BWW's total
returns, particularly on a relative basis during the unaffected three-
and five-year periods, to be impressive and
likely more than satisfactory for shareholders."
Glass Lewis also acknowledged that, "BWW's relative returns were
strongest when measured against the closest and most appropriate peer
group, in our view, being the casual dining peers. Even
when measured against the proxy peers supposedly preferred by Marcato,
we see that BWW significantly outperformed the median returns of that
group over the unaffected three- and five-year periods considered to
be more relevant by the Dissident."
2. ISS and Glass Lewis BOTH rejected Marcato's principal
premise for this proxy contest. Marcato's only substantive idea is a
massive refranchising of Buffalo Wild Wings restaurants. This has
been called "unwise" by ISS and an "aggressive, unprecedented and
unfounded strategy" by Glass Lewis. Sell-side analysts from Longbow
Research believe it "could place substantial pressure on the company's
valuation,"ii while Dougherty & Co. is "skeptical"iii
and Oppenheimer & Co. Inc. is "more attracted"iv to
Buffalo Wild Wings without such a strategy. The Company has previously
highlighted the untested, aggressive and impossible assumptions
supporting Marcato's refranchising analysis, and the Company's own
analysis indicates Marcato's proposed refranchising does not create
long-term value for shareholders. Notwithstanding the overwhelming
opposition to this proposal, Marcato's founder and director nominee,
Mick McGuire, continues to advocate for the massive refranchising. If
Mr. McGuire is elected to the Board, he will divert attention from
critical operational issues to focus on his refranchising proposal.
3. Buffalo Wild Wings has made excellent progress on its
operational initiatives and strategy to drive shareholder value in the
face of industry headwinds. When the Company began facing headwinds
in 2015, the Board and management team immediately took action, ceasing
acquisition efforts, dramatically slowing new store openings, hiring an
executive recruiting firm to help refresh the Board and starting a share
repurchase and capital structure optimization plan. These initiatives
began long before Marcato approached the Company in the summer of 2016.
The Company is executing on a plan to improve margins, lower the cost of
capital and optimize the mix of owned and franchised restaurants. The
Company has engaged experts to assist and projects that it will achieve
$40-50 million in annualized savings by the end of 2018.
ISS stated, "[I]t is encouraging to see
management focused on… projects such as Stadia design,
guest tablets, and the ability to strategically pace service during a
game…Other encouraging facts include announced cost control
initiatives, which could help Buffalo Wild Wings sustain margins while
it invests to improve guest experience..."
Glass Lewis noted, "The Company has also developed and clearly
communicated what appears to be a reasonable strategic operating plan
aimed at increasing restaurant-level profitability through sales
initiatives and cost-saving measures, while also pursuing financial
strategies such as a realigned capital structure and restaurant
portfolio optimization in a manner which we
believe to be more prudent and rational than the plan proposed by the
4. Marcato's strategy is a short term plan that will do
lasting damage to Buffalo Wild Wings. Consider DineEquity.
Both ISS and Glass Lewis analyzed the very poor operating and stock
market performance of DineEquity since it refranchised its Applebee's
restaurants. Marcato supported the plan and, after owning the stock for
a little more than a year, quickly sold the stock into the share
repurchase program funded by the proceeds of the refranchising. As Glass
Lewis observed, "[A]fter Marcato supported the refranchising at
Applebee's, Marcato held DineEquity stock for only a short time before
selling its entire position. Applebee's same store sales were down
nearly 8% in Q1 2017." ISS acknowledged, "DineEquity's experience with
Applebee's does not appear reassuring to Buffalo Wild Wings
shareholders." We believe that Marcato will sell its stock into the
share repurchase program they suggest Buffalo Wild Wings undertakes,
just like Marcato did with DineEquity. And just like Applebee's, Buffalo
Wild Wings will be left operationally weakened.
5. Buffalo Wild Wings has outperformed its casual dining peer
companies over almost all periods of time. However, Marcato is
advocating for shareholders to remove every director with more than
eight months of tenure and for the Board to fire the Company's CEO.
These are the very people who have enabled Buffalo Wild Wings to be so
successful. The Company would only have new directors, with no historic
knowledge of Buffalo Wild Wings, if shareholders support Marcato's slate
of nominees. The Company's slate, by contrast, offers a healthy mix of
experienced, knowledgeable directors and newly added ones; the Company's
nominees have experience in restaurants, food service, consumer
marketing, sports marketing, entertainment, retailing and financial
As Glass Lewis stated, "[W]e don't believe [Marcato's] proposal of
replacing all three of the remaining independent directors who have
served on the board for more than one year with the
Dissident's…nominees, is either warranted or advisable. Such an
outcome would eliminate virtually all
remaining independent institutional knowledge of the Company, which
experience may continue to be critical for BWW's future success."
6. Marcato continues to tout its 9.9% beneficial ownership of the
Company's stock. The reality is that much of that position consists of
call options with a $175 strike price exercisable by June 16, 2017, just
two weeks after the Annual Meeting - creating the illusion of 9.9%
ownership, when Marcato would never exercise those options before the
Annual Meeting. At the same time, Marcato has in-the-money put
options covering nearly its entire ownership position in Buffalo Wild
Wings stock. Marcato continues to proclaim its merits as a concerned
long-term shareholder, while also locking-in its gains and preparing for
a potential exit.
7. After extensive analysis of Marcato's materials, Glass
Lewis recommended in its May 26, 2017 report that Buffalo Wild Wings
shareholders vote on the YELLOW proxy card "FOR" the election of ALL of
Buffalo Wild Wings' director nominees and ALL of the
TIME IS SHORT - PROTECT THE VALUE OF YOUR INVESTMENT IN BUFFALO WILD
Buffalo Wild Wings shareholders are reminded that their vote is
extremely important, no matter how many shares they own. Buffalo Wild
Wings strongly recommends that shareholders elect the Company's
best-in-class leaders by voting the YELLOW proxy card for ALL
Buffalo Wild Wings' nominees.
Lazard Ltd is serving as financial advisor and Faegre Baker Daniels is
serving as legal advisor to the Company.
If you have any questions or require any assistance with voting your
please contact the Company's proxy solicitor listed below:
MACKENZIE PARTNERS, INC.
105 Madison Avenue
New York, New York 10016
Call Collect: (212) 929-5500
Toll-Free (800) 322-2885
About the Company
Buffalo Wild Wings, Inc., founded in 1982 and headquartered in
Minneapolis, is a growing owner, operator and franchisor of Buffalo Wild
Wings(R) restaurants featuring a variety of boldly-flavored,
made-to-order menu items including its namesake Buffalo, New York-style
chicken wings. The Buffalo Wild Wings menu specializes in 21
mouth-watering signature sauces and seasonings with flavor sensations
ranging from Sweet BBQ(TM) to Blazin'(R). Guests enjoy a welcoming
neighborhood atmosphere that includes an extensive multi-media system
for watching their favorite sporting events. Buffalo Wild Wings is the
recipient of hundreds of "Best Wings" and "Best Sports Bar" awards from
across the country. There are currently more than 1,220 Buffalo Wild
Wings locations around the world.
To stay up-to-date on all the latest events and offers for sports fans
and wing lovers, like Buffalo Wild Wings on Facebook, follow @BWWings on
Twitter and visit www.BuffaloWildWings.com.
Cautionary Statement Regarding Certain Information
This communication contains "forward-looking statements" within the
meaning of the federal securities laws. Such statements include
statements concerning anticipated future events and expectations that
are not historical facts. All statements other than statements of
historical fact are statement that could be deemed forward-looking
statements. Actual results may vary materially from those expressed or
implied by forward-looking statements based on a number of factors,
including the factors described under "Risk Factors" in Part I, Item 1A
of our Annual Report on Form 10-K for the fiscal year ended December 25,
2016, as updated or supplemented by subsequent reports we file with the
SEC. We do not assume any obligation to publicly update any
forward-looking statement after they are made, whether as a result of
new information, future events or otherwise.
Buffalo Wild Wings, Inc., its directors and certain of its executive
officers and employees are participants in the solicitation of proxies
from Buffalo Wild Wings shareholders in connection with its 2017 annual
meeting of shareholders to be held on June 2, 2017. Information
concerning the identity and interests of these persons is available in
the definitive proxy statement Buffalo Wild Wings filed with the SEC on
April 21, 2017.
Buffalo Wild Wings has filed a definitive proxy statement in connection
with its 2017 annual meeting. The definitive proxy statement, any
amendments thereto and any other relevant documents, and other materials
filed with the SEC concerning Buffalo Wild Wings are (or will be, when
filed) available free of charge at http://www.sec.gov
Shareholders should read carefully the definitive proxy statement and
any other relevant documents that Buffalo Wild Wings files with the SEC
when they become available before making any voting decision because
they contain important information.
Permission to use quotations neither sought nor obtained. Emphasis
Longbow Research, January 2017
Dougherty & Co., October 2016
Oppenheimer & Co. Inc., September 2016
View source version on businesswire.com: http://www.businesswire.com/news/home/20170531005491/en/
Buffalo Wild Wings, Inc.
Additional Investor Contact
Bob Marese / Paul Schulman, 212-929-5500
Frank, Wilkinson Brimmer Katcher
Meaghan Repko / Nick Lamplough,
Source: Buffalo Wild Wings, Inc.
News Provided by Acquire Media