Applebee's (APPB) directors prove that corporate governance does still exist

Normally when a company announces a definitive agreement to be acquired, you can tell when it happened just from looking at the stock's chart. That's because takeovers usually happen at substantial premiums to the stock's most recent trading price. In the case of Applebee's International (NASDAQ: APPB), the premium when IHOP Corp. (NYSE: IHP) agreed to acquire the company was so small that it's not noticeable on the stock's chart.

I couldn't believe the Applebee's board would agree to such a deal, and it's refreshing to see that at least a few directors are none too pleased. According to DealBook, "Applebee's disclosed Thursday that five board members, including its chairman, its chief executive, and its chief financial officer, are opposed to the $1.9 billion sale. That wasn't enough to stop the board from approving the deal in July -- nine directors voted in favor -- but it represents an unusual level of internal opposition to a supposedly friendly deal."

I've been skeptical of the deal since it was announced. In July, I wrote that if IHOP's plan to revive the company would work, Applebee's shareholders would miss out on the upside by selling out now. Then investor Sardar Biglari acquired a small stake in the company and expressed his displeasure: "... 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."

Perhaps this disclosure of dissenting directors (including the CEO, chairman, and CFO!) will spark a grass-roots campaign to block the deal, but the stock isn't trading like such a campaign would have much success.