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To: James Strauss who wrote (1369)	1/6/1998 6:32:00 PM
From: lostmymoney	Respond to of 2377

Heres what I thought was interesting to the deal. Foley, who is putting this together is very good. Buying a chain for 20 times earnings is favorable on the surface, considering how it will help lower GB Foods bloated price-to-earnings ratio. Underneath it gets even better. Thanks to the JB Restaurants conversion, the size of Timber Lodge is about to double. This is cheap and fast expansion -- not all that different from when WSMP announced the purchase of Sagebrush three months ago. If and when the deal closes, earnings estimates for GB, which were expected to grow from $0.12 to $0.16 a share this year, should be hiked dramatically. How so? GB will probably only issue about 2.7 million shares for the acquisition. That is just a 38% hike in shares outstanding for a deal that will find revenues and earnings for the merged companies growing at least three-fold next year. Adding the 1998 earning estimates for both companies ($1.2 million for GB and $1.6 million for Timber Lodge) and dividing it by 10 million shares shows that earnings estimates should grow to at least $0.28 a share -- before considering the impact of the converted units that could push that figure up as high as $0.40 a share even with the warrant conversion from Fidelity. While the move may dampen GB's focus from the low overhead ease of being a Green Burrito royalty-collecting entity to that of being a physical restaurant operator, suddenly a stock with valuations that seemed high by just about every fundamental barometer now has realistic forward looking P/E, price-to-book, and price-to-sales ratios.