Strange corporate gyrations at Einstein Bagels (Jack Bog's Blog)

The corporate dudes at Einstein Bagels are a curious bunch. Here there are, just having bought out Portland's Kettleman Bagel outfit -- they haven't even converted all of the stores over to their brand yet -- and now they've up and announced that they're putting their entire company up for up for sale.

It's obvious that these folks are focused on only one kind of dough -- and it's not the kind you make bagels out of. Whatever the wisdom of their takeover of Kettleman, now they're looking to pass the outcome of that $5 million transaction on to a new owner. It makes no sense, but that's corporate America. Besides, to these guys, $5 million is like a quarter. The market capitalization of the company is nearly 60 times that.

Here are the top officers of Einstein and their compensation. The CEO made a mere $1.26 million last year. Maybe he's just tired of working for slave wages.

It turns out that the Einstein company, whose shares are publicly traded, is controlled by hedge fund wunderkind David Einhorn. Maybe he sent up one of his famous smoke signals, saying that he wants out of the bread business. We can't say that we blame him. A bagel empire based in Lakewood, Colorado? Sounds way too white bread for our taste.

Comments (5)

They may not know bagels, but they know pigs and lipstick. One quarter in a row of earnings increases, and they're off to annuitize it.

Posted by Allan L. | May 5, 2012 9:32 AM

do not worry, if there is a market for good bagels in portland, then someone will fill it.

Posted by mcinor | May 5, 2012 12:10 PM

You are right Mcinor. Mayor Adams just found another $5 million in the budget to fund his new Oregon Bagel Initiative.

Posted by The original Bob W | May 5, 2012 2:27 PM

Looks like management did a good job over last five years of generating consistent cash flow from a boring, slow-growth, low margin business, retiring a large portion of its debt, and transforming it into a solid citizen, dividend paying entity.

What appears to be going on now, is management, at the hedge fund manager's behest, is looking for a buyout partner who will assist in releveraging the company, relying on today's artificially low interest rates (thank you Ben) to boost equity returns. Chances are BAGL goes private for a few years, before going public again, generating another round of outsize returns for hedge fund clients. This is a Federal Reserve enabled finance game, not economic value creation. Let's hear it for QE III and QE IV to come!

Posted by Newleaf | May 5, 2012 2:48 PM

Sounds like there's now a big hole in the Portland bagel market.

(I couldn't resist.)

Posted by Sal | May 6, 2012 10:10 AM

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Saturday, May 5, 2012

Strange corporate gyrations at Einstein Bagels

Comments (5)

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