Applebee's Shareholders OK Sale To IHOP

Shareholders of Applebee's International Inc. on Tuesday approved an offer by pancake house operator IHOP Corp. to buy the casual dining chain for $1.9 billion in cash.

The sale, which also includes Glendale, Calif.-based IHOP taking on $155 million in Applebee's debt, is expected to close by Nov. 29.

More than 70 percent of shares voting approved the agreement, which had been criticized by some as shortchanging shareholders.

Under terms of the deal, shareholders of Overland Park-based Applebee's will be paid $25.50 per share, a slight premium from the $25.20 the company's shares fetched at the end of trading Monday.

Officials at both companies have characterized the deal as a way to help rejuvenate Applebee's, one of the nation's largest restaurant chains that has been plagued for the past year by falling sales and diminishing profits.

It also is viewed as a coup for IHOP, which is smaller than Applebee's but has shown success in building its own brand and sales in the face of economic headwinds.

Julia Stewart, IHOP's chief executive officer and a former Applebee's executive, has said she plans to refranchise hundreds of Applebee's company-owned stores and sell real estate tied to around 200 of those stores as a way to pay for the deal.

Once completed, the deal will create a company with $6.8 billion in annual sales and more than 3,200 restaurants.

Applebee's Chairman Lloyd Hill, who has been with the company since 1989 and stepped down as CEO last year, had voted against the deal as a member of board of directors and indicated he would vote against it as a shareholder.

"This is not the future I had envisioned for Applebee's," a somber Hill said in announcing the results of Tuesday's vote, while adding that he accepted the direction the majority of the company's directors and shareholders had chosen.

Hill thanked Applebee's employees and encouraged them to work with IHOP management in improving the company.

"I remain confident in the incredible appeal and strength of this great American brand," he said.

Shares of Applebee's were up 7 cents at $25.27 in trading Tuesday morning. Shares of IHOP were down 84 cents at $61.84.