DENN: Take Private Deal Will Anchor Shares Near Agreed Cash Offer

We are raising our Denny's price target slightly to approximately $6.25 per share from about $6.12, as analysts now anchor valuation more closely to the announced takeout price and see limited upside beyond the agreed acquisition terms.

Analyst Commentary

Analysts largely view the announced acquisition as a valuation ceiling in the near term, prompting a recalibration of ratings and forward expectations for the stock.

With the transaction price now serving as the primary reference point, research commentary has shifted from growth and multiple expansion potential to deal certainty, timing, and the low likelihood of a superior competing offer.

Bearish Takeaways

• Bearish analysts argue that the agreed acquisition price effectively caps near term upside, limiting the appeal of owning the shares beyond a narrow merger arbitrage spread.
• Several now see the risk reward skewed toward execution and regulatory risks on the deal closing, rather than operational upside from same store sales or margin improvements.
• Expectations for a competitive bidding process have been tempered, with analysts viewing the probability of a materially higher offer as low, reducing optionality for equity holders.
• The reset in ratings from prior positive stances underscores a view that, absent the transaction, fundamental growth and valuation expansion would not have justified meaningfully higher price targets.

What's in the News

• TriArtisan Capital Advisors, Treville Capital Group and Yadav Enterprises signed a definitive agreement to acquire Denny's Corporation for approximately $350 million in cash, with total deal financing expected to reach about $640 million and closing targeted for Q1 2026 (M&A Transaction Announcements).
• Oppenheimer downgraded Denny's to Perform from Outperform with no price target, citing the agreed $6.25 per share take private offer and a low likelihood of a competitive bidding process, and expects the deal to close in Q1 2026 (Periodicals).
• Denny's disclosed that it will be unable to file its upcoming 10 Q with the SEC by the required deadline, highlighting near term reporting and compliance timing risk (Delayed SEC Filings).
• The company reported no share repurchases in the most recent tranche period, but confirmed it has completed its long running buyback program, retiring over 15.1 million shares for about $160.73 million since 2019 (Buyback Tranche Update).
• A special or extraordinary shareholders meeting has been scheduled for January 13, 2026, a key step for investor approval of the pending acquisition (Special or Extraordinary Shareholders Meeting).

Valuation Changes

• Fair Value per Share, unchanged at approximately $6.13, remains closely aligned with the announced $6.25 take private offer.
• Discount Rate, risen slightly from about 11.73% to roughly 11.81%, modestly increasing the required return embedded in the valuation.
• Revenue Growth, effectively unchanged at around 3.72% annually, signaling no material shift in top line expectations.
• Net Profit Margin, essentially flat at approximately 7.52%, indicating stable assumptions for long term profitability.
• Future P/E, risen slightly from about 11.36x to roughly 11.38x, reflecting a marginally higher multiple applied to projected earnings.