Steak n Shake sells unit to Western Sizzlin

INDIANAPOLIS — Restaurant operator The Steak n Shake Co. said it sold a subsidiary to Western Sizzlin Corp. for $38.8 million.

Both restaurant operators said the purchase price is based on $13.67 per share for 2.8 million shares outstanding of Western Sizzlin as of Thursday, Steak n Shake's $12 closing share price, and a special dividend payable to Western shareholders.

Western shareholders of record as of Nov. 2 will receive the special dividend, which will be distributed on Nov. 6. The dividend will be payable at the rate of 0.4657 shares of Steak n Shake for each share of Western outstanding as of the record date.

Each share of Western's common shares will be converted with the right to receive debentures equal to $8.08 per share. The debentures have a five-year term from the merger's effective date and bear interest at the rate of 14 percent annually.

The dividend is payable to shareholders as of Nov. 2, regardless of whether they are shareholders of record when the merger is effective.

B. Riley & Co. LLC is acting as financial adviser to the special committee of Western's directors. The deal was announced Thursday evening.