An investor in shares of California Pizza Kitchen, Inc. (NASDAQ:CPKI) filed a lawsuit in State Court in effort to stop the proposed takeover of California Pizza Kitchen by an affiliate of Golden Gate Capital.
According to the complaint the plaintiff alleges that the defendants breached their fiduciary duties arising out of the attempt to sell California Pizza Kitchen, Inc too cheaply via an unfair process to an affiliate of Golden Gate Capital.

On Wednesday, May 25, 2011 California Pizza Kitchen, Inc. (NASDAQ CPKI) and Golden Gate Capital announced that they have entered into an agreement under which an affiliate of Golden Gate Capital will acquire California Pizza Kitchen, Inc for $18.50 per share in cash, or approximately $470 million.
Following the announcement shares of California Pizza Kitchen, Inc. (NASDAQ:CPKI) jumped from $16.83 on Tuesday to $18.50 on Wednesday.

California Pizza Kitchen said the purchase price represents a 32% premium to the 30-day average price prior to the Company's Board of Directors authorizing management to begin exploring strategic and financial alternatives on February 23, 2010, and a 15% premium to the 30-day average price prior to the announcement of the transaction. The transaction is currently expected to close in the third quarter of this year.

However, the plaintiff alleges that the offered $18.50 are “woefully inadequate”. In fact the offer of $18.50 per CPKI share represents a mere 11 percent premium over CPK’s closing price Tuesday the day before the announcement of the buyout. In addition shares of California Pizza Kitchen, Inc. (Public, NASDAQ:CPKI) traded as recently as February 15, 2011, thus well before the boards announcement to explore strategic and financial alternatives, as high as $17.85 per share, leaving CPKI stockholder with only a meager premium. During 2010 CPKI shares reached even as high as $21.22 per share, thus asking certain CPKI investors to hand over their shares at a discount. Furthermore at least one analyst has set a target price of $24.00 per share for California Pizza Kitchen stock.

Additionally another investment group reportedly quickly stepped in to say it wanted to talk about the possibility of a leveraged buyout of California Pizza Kitchen at or above $19.50 a share. In a filing with the U.S. Securities and Exchange Commission (“SEC”) the Clinton Group investment firm said it believed there may be other alternatives to maximize shareholder value, including the possibility of a $19.50-a-share or higher leveraged recapitalization of California Pizza Kitchen.

Further the plaintiff claims that the offer comes just as California Pizza Kitchen’s financial outlook is improving dramatically. In fact California Pizza Kitchen has reported over the past four 52/53 week filing periods relatively consistent Total Revenue ranging from $632.88million to $677.07million.