Tilman Fertitta’s Golden Nugget casino business has offered to buy the rights to The Palm high-end steakhouse chain for $50 million, a move that could end a bitter family feud over the iconic restaurant brand while adding yet another concept at a fire-sale price to Fertitta’s sprawling restaurant empire.
The deal is subject to the approval of the Florida bankruptcy court that is overseeing a Chapter 11 filing by The Palm’s parent company, Just One More Restaurant (JOMR), and a Chapter 7 filing for protection by the company’s principal owners, Bruce Bozzi and Walter Ganzi, the grandchildren of The Palm’s founders. The two have been squabbling in court with two cousins and the estate of the third over a $120 million payment that Bozzi and Ganzi were ordered to pay the relatives for what a court agreed were undercollected royalties.
The court found that Bozzi and Ganzi had paid a fee grossly below market value for the operation of their units of The Palm, or all but three of the chain’s 24 units. The fees they paid were part of the revenues that were split among the family member.
JOMR subsequently filed for Chapter 11 protection. Bozzi and Ganzi then filed for Chapter 7 protection, saying they needed time to raise the money.
The pair disclosed plans to commence a sale of the brand, but were challenged in court by their cousins, who said they’d prefer to keep the restaurant chain as a family asset. A court rebuffed the challenge, clearing the way for a sale.
Fertitta was widely expected to enter a bid because of his track record of opportunistically buying restaurant concepts. Earlier this year, he acquired Restaurants Unlimited out of bankruptcy. Simultaneously, he stepped forward to acquire Del Frisco’s Double Eagle Steakhouse and Del Frisco’s Grille from L Catterton, which bought the Del Frisco’s group because it wanted two small growth concepts within the fold, Barcelona and Bartaco.
Fertitta is the stalking horse bidder in The Palm sale, meaning he wins the acquisition rights if another suitor doesn’t step forward with a higher offer.
An auction of JOMR is scheduled for Monday. If another bidder tops Golden Nugget’s offer, Fertitta will be reimbursed what he’s spent to place his $50 million bid.
The addition of The Palm would swell Fertitta’s steakhouse holdings, which already include Morton’s, Saltgrass, Mastro’s and Chart House. His extensive portfolio also includes a number of tourist attractions, in addition to Golden Nugget casinos.
Fertitta is also the owner of the Houston Rockets NBA franchise.
Even if no bidder comes forward, the billionaire’s $50 million bid is subject to approval by the bankruptcy court.