Holder of 1M Applebee’s shares says he will oppose IHOP deal

ROANOKE, Va. Sardar Biglari, chairman and chief executive of The Lion Fund LP hedge fund and the Western Sizzlin’ Corp. family restaurant chain, said Wednesday that he planned to vote against IHOP Corp.’s pending acquisition of Applebee’s International Inc. because he regards the price as too low.

He said in a statement that the $25.50 per-share bid for Applebee’s is “below the fair value” of the casual-dining giant’s stock, adding that his group was “exploring all of [its] options.”

Biglari said his investment vehicles own about 1 million Applebee’s shares, including shares of common stock underlying over-the-counter call options. At the close of the latest quarter, Applebee’s had about 75 million shares outstanding.

Glendale, Calif.-based IHOP would not comment on the news. The operator or franchisor of 1,319 IHOP restaurants announced July 16 its plans to acquire Applebee’s in a transaction valued at about $2.1 billion.

IHOP had said it plans to turn Applebee’s, which operates about 508 locations and franchises an additional 1,435 units, into a purely franchised model, reduce its costs and re-energize the brand.

Biglari said he likes IHOP’s plan, but wants Applebee’s to pursue refranchising and a less capital intensive business model on its own, so that Applebee’s shareholders, not IHOP stakeholders, could reap the benefits of a turnaround.