OVERLAND PARK Kan. Ending a bitter proxy battle that was to culminate in a shareholder vote May 25, Applebee's International Inc. and activist investor Richard Breeden have reached a settlement in which Breeden and another of his director nominees receive board seats effective today.
Applebee's, which currently is exploring options for the company amid weak sales, slowed traffic and declining profit, also said it had received a number of "non-binding preliminary proposals" to acquire the company, and that its strategy committee will review those bids before asking potential buyers to submit "definitive, binding" proposals.
Applebee's added that it would continue exploring options other than a sale, including a recapitalization and a securitization of the company's royalty stream and other assets. The company operates or franchises about 1,930 namesake restaurants. It gave no time line for an outcome to its strategic review.
Breeden, who through his hedge fund Breeden Capital Management LLC owns a 5-percent stake in Applebee's, and his nominee Laurence Harris, partner at the Washington, D.C.-based law firm Patton Boggs LLP will be added to Applebee's slate of directors for three year board terms to be approved at the shareholder meeting. Breeden also will be added to the restaurant company's strategy committee.
Breeden has been pressuring Applebee's to reduce the number of corporate stores, take advantage of its real estate assets and reduce corporate spending, especially by restructuring the compensation of senior executives. He had nominated four executives to Applebee's board and just last month he rejected an offer from Applebee's for two board seats, saying in an interview it was a "public relations play" on Applebee's part.
In a statement Thursday, Breeden said, "With all parties willing to work together positively to look at the issues and to design new solutions for the future, there is no reason that Applebee's cannot make strong progress in a number of areas."
Applebee's director and chairman of the corporate governance and nominating committee Jack P. Helms said, "Applebee's management and board of directors concur with Mr. Breeden that recent company performance must improve."
"Mr. Breeden has raised a number of fair and appropriate questions which our management and board will continue to consider and address," he added.