Stock advisors divided on Applebee's-IHOP merger

Nation's Restaurant News,  Nov 5, 2007  

Tags: advisor, Applebee's, merger, stock

• E-mail
• Print
• Link

OVERLAND PARK, KAN. -- As the Oct. 30 date approached for a shareholder vote, two stockholder advisory firms issued opposing recommendations about the pending $2.1 billion acquisition of Applebee's International Inc. by IHOP Corp., of which about $1.9 billion would go to equity holders.

Both advisory firms in their Oct. 18 suggestions compared the $25.50-per-share buyout proposal against the "stand-alone" recapitalization strategy put forth by Applebee's management after IHOP temporarily dropped out of the bidding process.

Each advisor cited--but drew a different conclusion--about a split in Applebee's 14-person board over IHOP's final offer, which ultimately was accepted by a 9-5 vote.

Glass Lewis & Co. observed that Applebee's directors had "expressed their differences of opinion" and received advice from multiple outside experts, and had not "taken the decision to sell the company lightly."

Conversely, Proxy Governance Inc. of Philadelphia said that while it admired the board's decision process and thinks Overland Park-based Applebee's was "well-shopped," the firm was "not convinced that the [IHOP] offer represents the best value for shareholders."

Proxy Governance said a rise in IHOP's share price since the deal was announced suggests that Applebee's shareholders, if they vote to approve the deal, might forego lucrative growth that could be theirs if the company remained independent.

COPYRIGHT 2007 Reproduced with permission of the copyright holder. Further reproduction or distribution is prohibited without permission.
COPYRIGHT 2008 Gale, Cengage Learning