Private Equity Places Takeout Order for P.F. Chang's

PF Chang's shares were trading slightly above the offer price at $51.61 in early trading on Tuesday; its highest share prices in more than a year, and on top of a 30% rise on the recent M&A chatter.

In the first quarter, revenue rose to $318.9 million, from 2011 levels, while profit narrowed to $6.3 million. Same store sales at stores open more than a year fell 0.6% at P.F. Chang's and 1.7% at Pei Wei in the first quarter. Those earnings represented a 42% drop in first-quarter profit, missing Wall Street expectations, partly due to higher operating and food costs.

Still, in spite of the company's waning revenue and profitability, P.F. Chang's may make for an ideal private equity turnaround. The company generates substantial free cash flow that has grown in recent years. Meanwhile it recently pared its debt to $111 million from $130 million, a year ago.

Goldman Sachs and DLA Piper are advising PF Chang's on its sale, while Wells Fargo Securities, Deutsche Bank Securities and law-firm Weil, Gotshal & Manges are advising Centerbridge.

-- Written by Antoine Gara in New York.