Send PM
Followers 29
Posts 5292
Boards Moderated 2
Alias Born 07/18/2003

Re: None

Friday, 08/08/2008 8:10:16 AM

Friday, August 08, 2008 8:10:16 AM

Post# of 52
Sardar Biglari not too happy with Applebee's buyout

Posted Jul 26th 2007 9:45AM by Zac Bissonnette
Filed under: Deals

On July 17th, I had this to say about IHOP's (NYSE: IHP) deal to acquire to buy Applebee's (NASDAQ: APPB): "iHop shares soared on the news -- it's one of the only times I can think of that shares of an acquiring company have risen 3 times as much as those of the company being acquired. The premium was tiny -- the stock traded higher a month ago -- and represented a paltry return for the company's shareholders... I'm surprised none of the big institutional shareholders haven't spoken up yet."

Well none of the big institutional shareholders has spoken up, but a small yet feisty one has. Sardar Biglari, the Chairman and CEO of The Lion Fund and Western Sizzlin (OTC BB: WSZL), issued a press release blasting the deal:

I believe Applebee's board has made a grave mistake in agreeing to an undervalued bid for the entire company...

My assertions appear supported by the market's response to the announcement of the proposed transaction. On July 13, 2007, the business day prior to the announcement of the transaction, IHOP's and Applebee's stocks closed at $56.25 and $24.38, respectively. Since that announcement, IHOP's market value has jumped by approximately 16%, or $153 million, to $65.02 per share as of yesterday's close of business. However, the stock price of Applebee's, the acquiree, enjoyed virtually no premium, nay less than 1%, as of yesterday's close of business. Usually, it's the selling company, not the buying one, whose stock price appreciates substantially. Clearly, the proposed acquisition price does not reflect the fair value of Applebee's stock, and the substantial inherent value of Applebee's is being transferred to IHOP shareholders, as evidenced by the sizable increase in IHOP's market capitalization. In other words, we believe that if Applebee's undertook the same initiatives as IHOP has in mind, the appreciation IHOP recently gained would, at the very minimum, shift to Applebee's.

This is exactly the argument that I made. Biglari is 100% right in his criticism, and his recent success in getting a deal done at Friendly's (AMEX: FRN) gives him some credibility.

It remains to be seen whether his effort will gain the momentum to nix the deal or get a higher price, but it's a pretty low-risk wager for Biglari. He controls just 1.4% of the company, so he will need to get some big money backers for this battle to go anywhere.

Day Range:
Last Trade Time:
Total Trades:
  • 1D
  • 1M
  • 2M
  • 3M
  • 6M
  • 1Y
  • 2Y
  • 3Y
  • 5Y
Recent BH News

FEATURED New Break Identifies High-Grade Gold, up to 70.60 g/t Au, via Grab Sampling at Moray Sep 29, 2022 10:29 AM

FEATURED Rising Star Trillion Energy Ready to Supply Much Needed European Gas Sep 29, 2022 8:00 AM

FEATURED Goldshore Intersects 192.75m @ 1.02 g/t Au from 94.45m depth in MMD-22-051 Sep 29, 2022 7:30 AM

FEATURED SFLMaven Plans for New Potential Revenue from Patent Pending HolgoGlow Technology for the Metaverse Sep 29, 2022 6:30 AM

FEATURED Ludwig's genomic-based mRNA Inflammatory Index - a Ground-Breaking Technology Sep 28, 2022 1:34 PM

ILUS Confirms Share Lock-Up Opportunity ILUS Sep 29, 2022 1:25 PM

ILUS Appoints Investment Bank to Assist With Up-List and Associated Acquisitions ILUS Sep 29, 2022 11:22 AM

Arts & Collectibles DOT Company Coinllectibles Seeing a Very Bright Future with Revenue jumping by 100% to US$8.8 Million in First Half of 2022 as compared to The Year Before COSG Sep 29, 2022 8:44 AM

GBT is researching the Development of Electro-Thermal Aware Design Environment for Integrated Circuits.Seeking to Address Advanced Nanometer Nodes Semiconductors Electro-Thermal Modeling and Optimization. GTCH Sep 29, 2022 7:30 AM

Headwater Gold Commences Multi-Rig Drill Program at the Spring Peak Project, Nevada to Follow Up Epithermal Vein Discoveries HWAUF Sep 28, 2022 10:13 AM

Valiant Eagle Inc. (OTC: PSRU) Significantly Increases Its Equity Stake in Sumer Technologies, Inc., as the Ride-Sharing Company Readies Its Much Anticipated Innovative Zumr App For Q1 2023 U.S. Launch PSRU Sep 28, 2022 9:30 AM

Good Gaming Inc. Announces Official Launch Date For Their New Minecraft OP Prison Game Featuring MicroBuddiesTM GMER Sep 28, 2022 9:15 AM

Trend Innovations Holding Inc. Completes the Second Version of the AI Consultant Chatbot on the Company's Website TREN Sep 28, 2022 9:00 AM

GBT will be attending the Interactive MoneyShow Virtual Expo, on Sep 27-29, Presenting its Technologies, Innovations and Future Visions GTCH Sep 28, 2022 7:30 AM

Branded Legacy, Inc. Reduces Authorized Shares By 300 Million BLEG Sep 27, 2022 11:53 AM