I wasn't too impressed with IHOP's (NYSE: IHP) decision to buy Applebee's (NASDAQ: APPB). But at the same time, I think Applebee's shareholders should be pretty upset. 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.
Today's Wall Street Journal asked the question Can iHOP Chief Restore Polish to Applebee's? According to the Journal:
IHOP Corp. Chief Executive Julia Stewart said she plans to revive Applebee's International Inc. by better distinguishing the chain from competitors, remodeling its restaurants and selling hundreds of company-owned locations to franchisees.
OK -- distinguishing the chain, remodeling, and emphasizing franchising. As Kevin Kelly wrote yesterday, it seems like a good idea, but the question is Why did Applebee's need to be sold to do that?
If Stewart's plan will work -- I doubt that it will because Applebee's will likely continue its decline as a brand -- Applebee's shareholders are getting the shaft.
I'm surprised none of the big institutional shareholders haven't spoken up yet.
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Reader Comments (Page 1 of 1)
7-17-2007 @ 8:30PM
Brian Bednarik said...
As shown here at newsvisual. http://www.newsvisual.com/newsvisual/2007/07/ihops-bold-purc.html
Their knowledge map shows the long term connection and experience current IHOP CEO has had with Applebee's. Being a previous executive at the company could give her a greater insight as to how she can follow IHOP's successful model, and therefore successfully franchise the individual restauraunts.
7-20-2007 @ 10:40PM
sbh said...
Is it a good deal to sell back my shares of Dominion Resources