Outback's other buyout offer

The industry has been abuzz with gee-whizzing over the pending $3.2 billion buyout of OSI Restaurant Partners, parent of the Outback Steakhouse and Carrabba's Italian Grill dinnerhouse chains. But a securities document filed this morning reveals the company had been approached with a buyout offer more than a year before the current deal was inked.

That time around, the would-be buyers included Blackstone Group, the private-equity behemoth that's in the process of going public. It was the deep pockets that would have funded the takeover casually suggested to OSI chief executive Bill Allen by another equity firm, Catterton Partners, at a trade show in October 2004. According to OSI's filing, a Catterton representative asked Allen if the company had ever considered going private through a buyout. Allen acknowledged that he hadn't. The representative followed up with a phone call in which he raised the possibility of a purchase by Blackstone and Catterton.

A non-disclosure agreement was signed on Nov. 29, and Blackstone and Catterton started kicking the tires, so to speak. By Dec. 2, OSI's board was meeting to discuss the possibility of a sell-out.

Conversations with Blackstone and Catterton continued through the early part of 2006. But on Feb. 15, the suitors alerted OSI's board that the firms couldn't top the $40.78 at which the company's shares were trading at the time. Discussions were terminated, and, according to the OSI filing, the dinnerhouse operator plunged forward with the three-year growth plan it had shared with Blackstone and Catterton.

But in April, the securities filing said, Allen was again informing the board of interest from Catterton. The filing doesn't provide details, other than saying the equity firm had been in touch with the CEO.

By May, according to the document, matters turned more formal. Catterton contacted Allen to let him know the firm was considering a buyout attempt in partnership with Bain Capital, the mega private-equity firm founded by current U.S. presidential hopeful Mitt Romney.

Allen informed the board of the new overture in early June, and a motion was made to enter into a non-disclosure agreement with the suitors. As the filing noted, one director balked at the hush-hush deal because of fears that outsiders would learn of the negotiations. But he was voted down.

The dissenter needn't have worried. The world wouldn't learn of the Catterton and Bain's interest until Nov. 6. In the meantime, negotiations continued, with the suitors starting their bidding with an offer of $37.50 per share. The board rejected it almost immediately. Bain and Catterton countered with a $38.50 offer. A special committee of OSI directors was formed, and, after what sounds like extensive consideration, that bid was rebuffed, too.

A counter of $39.50 per share was termed as "disappointing" by one of the board's two financial advisors. But discussions continued, culminating in a take-it-or-leave-it offer of $40 per share from Bain/Catterton. "A representative of Bain/Catterton indicated that $40.00 per share was the highest value Bain/Catterton would be willing to offer, the document notes.

Some directors thought it was a bluff and asked for more money. But the bidders held firm.

On Nov. 5, after soliciting and considering several outside valuations, the full board voted to accept the offer. The agreement was announced the next morning.

The securities document was filed this morning to let OSI investors know of another key date: The offer will be subjected to the approval of shareholders at a special meeting on May 8.