The Lion Fund, L.P. and Western Sizzlin Corp. Oppose Buyout of Applebee's International, Inc.
25 Juillet 2007 - 6:12PM
PR Newswire (US)
ROANOKE, Va., July 25 /PRNewswire-FirstCall/ -- Sardar Biglari,
Chairman and CEO of The Lion Fund, L.P. and Western Sizzlin Corp.
(OTC:WSZL) (BULLETIN BOARD: WSZL) , announced today that he intends
to vote against Applebee's International, Inc. (NASDAQ:APPB)
proposed transaction with IHOP Corp. (NYSE:IHP). Mr. Biglari Issued
the Following Statement Explaining Why He Intends to Vote Against
the Transaction: I want to express to you my concerns about the
possible sale of Applebee's ("Applebee's" or the "Company") to IHOP
Corp. ("IHOP") for $25.50 per share in cash, a price which I
believe is below the fair value of the Company. I believe
Applebee's board has made a grave mistake in agreeing to an
undervalued bid for the entire company. This arrangement is most
alarming because new board members promised to protect
shareholders' interests, yet they have not verbalized any
opposition to this ill-advised transaction. 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. Incidentally, we like IHOP's
plan to convert Applebee's to a nearly pure franchising model. The
future of Applebee's resides in its franchisees. The decision to
refranchise would yield several long-term strategic advantages.
Applebee's should be in the franchising business for the cogent
reason that it would achieve higher profit margins, assume less
risk, and require very little in capital expenditures -- all
strategic moves leading to healthy cash flows and high returns on
capital. Unfortunately, if the transaction is approved, IHOP's, not
Applebee's, shareholders are going to realize the benefits of
transforming the Company into an asset-light firm. We believe the
proposed transaction represents a losing exercise for the
shareholders of Applebee's. As shareholders, we are obliged to ask
how Applebee's can be sold at a mere 5.2% premium over the share
price as of the trading day (February 12, 2007) before the Company
announced that it was exploring strategic alternatives. We think
Applebee's shareholders would realize considerably more money if
the Company carries out the refranchising strategy as outlined by
IHOP rather than permitting the sale to go through at the currently
agreed price. As Chairman and CEO of The Lion Fund, L.P. and
Western Sizzlin Corp., I represent 1,019,000 shares of the
outstanding common stock of Applebee's (including shares of common
stock underlying over-the-counter American-style call options).
Because of our discontent with the proposed transaction, we are
currently exploring all of our options.
----------------------------------------------- This Press Release
is not a proxy solicitation. DATASOURCE: Western Sizzlin Corp.
CONTACT: Robyn B. Mabe, Chief Financial Officer Western Sizzlin
Corporation, +1-540-345-3195 Web site:
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