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An acquisition of Buffalo Wild Wings by Roark Capital could be in the cards, but the price has to be right.
Roark made an offer of more than $150 per share, or more than $2.3 billion, a source familiar with the matter told CNBC Monday, sending shares skyrocketing as much as 27 percent Tuesday.
The deal as propositioned by Roark is about a multiple of 10 times the company's EBITDA, just shy of the average multiple for U.S. restaurant deals over $10 million, which is 11 times EBITDA, according to Dealogic.
"We believe the greatest hurdle could be Marcato and its board seats; the majority of its stake was acquired in 2Q16 at $140-$150 with the thesis that shares could be worth $400," Peter Saleh, analyst with BTIG, wrote in a research note Tuesday.
Marcato is an activist investor that began building up a stake in Buffalo Wild Wings last year. After a bitter proxy battle, Marcato won three of the four board seats it was seeking.
After the contest ended, Buffalo Wild Wings' CEO Sally Smith said she would retire by the end of the year. The chicken-wing company has yet to name her successor.
"This process has taken longer than we expected, which we believe could be due to the company and board struggling to define a clear vision for improving shareholder value," Chris O'Cull, a Stifel analyst, wrote in a research note Monday.
Marcato isn't likely to gain much from a deal with Roark at its current price. It first started buying Buffalo Wild Wings shares in July 2016, when the stock was around $143 a share.
Ahead of the proxy battle, Marcato owned 9.9 percent of Buffalo Wild Wings' outstanding shares. As of Aug. 1, the company's stake fell to about 6.4 percent, according to FactSet.
Jim Badum, executive vice president of client partnerships at Ansira, the second-largest independent CRM firm in the U.S., told CNBC that he wouldn't be surprised if other firms began offering rival bids for the company. He also foresees Marcato trying to get a higher premium for the shares.
"The acquisition could ... provide an attractive exit for Marcato Capital," O'Cull said.
Buffalo Wild Wings' stock had dropped 34 percent over the last year from $163 a share to $108 a share, before surprising the street last month when it beat its third-quarter earnings expectations. As of Monday's close, the stock was down more than 28 percent over the past 12 months.
"Going private will absolutely help," Badum said. "Since BWLD has been hurt by its dependencies on chicken wings and the prices have seriously hurt margins, going private and having the opportunity to take a longer-term approach to solidifying the enterprise's direction and investing in the things necessary to achieve sustainable increased earnings will be easier in a privately held company than a publicly traded company — who lives and dies on quarterly earnings."
For Roark, the acquisition would fit well within its restaurant-heavy investment portfolio, including sandwich chain restaurant Arby's; CKE Restaurants, owner of Carl's Jr. and Hardee's; Jimmy John's and Moe's Southwest Grill, among others.
"We believe Roark's extensive restaurant experience could aid Buffalo Wild Wings' turnaround and cash in hand is difficult to turn down unless investors believe a recovery is already well underway," BTIG's Saleh said.
The deal would also be notable for potentially marking the return of private equity buyouts of publicly traded restaurants. Such deals have slowed, as restaurants have largely traded too expensively for financial buyers. Recent challenges though, including increased competition and preference for dining at home, have lowered share prices.
"While we can only speculate as to whether or not this bid was solicited, given the current state of oversupply in the casual dining industry and company-specific supply chain headwinds, we anticipate that the activist refranchising initiative may have faced growing resistance both internally and externally," Jeremy Scott, vice president of Americas research at Mizuho, wrote in a research note Monday. "We expect the board is strongly considering the offer."
Buffalo Wild Wings was not immediately available to comment.
— CNBC's Angelica Lavito and Lauren Hirsch contributed to this report.