When IHOP (NYSE: IHP) agreed acquire Applebee's nine months ago, Applebee's shareholders were none too pleased. Highly respected investor Sardar Biglari vocally opposed the deal, Applebee's director Burton Sack made plans to sue, and shares of IHOP rose more than Applebee's on the announcement -- a very rare occurrence.

But now things have changed as the restaurant industry has continued to weaken and shares of IHOP have lost a good chunk of their value. Applebee's competitors like Ruby Tuesday's (NYSE: RT) have plunged, and the deal is looking less well timed.

The company released its first quarter results this week and the Applebee's turnaround appears to be doing as well as could be expected given the environment -- the company saw the first quarter of positive same-store sales growth in two years. However, plans to sell and lease back some of the real estate that came with the deal has been "challenged by weakening credit market conditions." The plan to franchise more of the company-owned stores has made some progress.

Continue reading IHOP shows mixed results, some progress with Applebee's

IHOP shows mixed results, some progress with Applebee's originally appeared on BloggingStocks on Tue, 29 Apr 2008 15:35:00 EST. Please see our terms for use of feeds.

Continue reading Before the bell: GM, BSC, TIVO, YHOO, AAPL, F ...

Before the bell: GM, BSC, TIVO, YHOO, AAPL, F ... originally appeared on BloggingStocks on Thu, 29 Nov 2007 08:36:00 EST. Please see our terms for use of feeds.

MOST NOTEWORTHY:

• Friedman Billings resumed coverage of Cheesecake Factory (NASDAQ: CAKE) and Yum! Brands (NYSE: YUM) with Outperform ratings and a $30 target and a $46 target and Applebee's (NASDAQ: APPB) with a Market Perform rating and $25.50 target.
  
• American Superconductor (NASDAQ: AMSC) was initiated with a Buy rating and $33 target at Jefferies, as they believe repeat orders for wind turbine electrical systems could drive rapid revenue growth from 2008-2010.
  
• CIBC resumed coverage of First Solar (NASDAQ: FSLR) with a Sector Performer rating, as they believe shares are already pricing in the company's 2009 EPS potential.

• Morgan Stanley resumed coverage of Cablevision (NYSE: CVC) with an Underweight rating.
  
• US Steel (NYSE: X) was initiated with a Sector Performer rating and $117 target at CIBC.
  
• JP Morgan started SunPower (NASDAQ: SPWR) with an Overweight rating and Evergreen Solar (ESLR) with a Neutral rating.

Analyst initiations: Restaurant sector, AMSC and FSLR originally appeared on BloggingStocks on Mon, 05 Nov 2007 11:20:00 EST. Please see our terms for use of feeds.

Applebee's director to sue for money in IHOP deal originally appeared on BloggingStocks on Wed, 24 Oct 2007 18:14:00 EST. Please see our terms for use of feeds.

MOST NOTEWORTHY:

• Lehman downgraded the mortgage finance sector to Negative from Neutral citing the potential of over $100B in losses for the group in the coming years. Washington Mutual (NYSE: WM) was downgraded to Equal Weight from Overweight; IndyMac Bancorp (NYSE: IMB) and Countrywide Financial Corporation (NYSE: CFC) were downgraded to Underweight from Equal Weight.
  
• Applebee's International (NASDAQ: APPB) was downgraded to Underperform from Market Perform at Wachovia, as the firm sees potential downside risk if the company's acquisition of IHOP Corp (NYSE: IHP) does not go through, following mixed reviews from Proxy firms.
  
• Merriman downgraded shares of Fuel-Tech (NASDAQ: FTEK) to Sell from Neutral after channel checks indicated the competitive landscape is much more challenging than commonly perceived for the FUEL CHEM product line. Merriman sees significant risk to shares at current levels.
  
• Citigroup downgraded shares of BHP Billiton (NYSE: BHP), Anglo American (NASDAQ: AAUK) and Rio Tinto (NYSE: RTP) to Hold from Buy on valuation following the recent rally.

• Lehman downgraded the specialty finance sector to Neutral from Positive; the firm downgraded American Express Company (NYSE: AXP), Capital One Financial Corporation (NYSE: COF) and Discover Financial Services (NYSE: DFS) to Equal Weight from Overweight.
  
• Lululemon Athletica (NASDAQ: LULU) was downgraded to Neutral from Buy at Goldman Sachs.
  
• JP Morgan downgraded Dollar Tree Stores (NASDAQ: DLTR) to Underweight from Neutral.
  
• Angiotech Pharmaceuticals (NASDAQ: ANPI) was downgraded to Sector Performer from Sector Outperformer at CIBC and to Sector Perform from Outperform at RBC Capital.

Analyst downgrades: Mortgage finance sector, APPB, FTEK, BHP, AAUK and RTP originally appeared on BloggingStocks on Mon, 22 Oct 2007 10:45:00 EST. Please see our terms for use of feeds.

Applebee's (APPB) settles shareholder lawsuit originally appeared on BloggingStocks on Mon, 15 Oct 2007 15:43:00 EST. Please see our terms for use of feeds.

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.

Applebee's (APPB) directors prove that corporate governance does still exist originally appeared on BloggingStocks on Sat, 08 Sep 2007 18:40:00 EST. Please see our terms for use of feeds.

MOST NOTEWORTHY:

• Following FiServ's (NASDAQ: FISV) acquisition of CheckFree, Raymond James cut CKFR shares to Market Perform from Strong Buy and Baird downgraded shares to Neutral from Outperform.

• Talbots (NYSE: TLB) was cut to Sell from Hold at Citigroup based on valuation, continued earnings disappointments, and a lack of earnings visibility.

• Cowen downgraded shares of SPSS Inc (NASDAQ: SPSS) to Underperform from Neutral citing decelerating growth and poor earnings quality.

• Bear Stearns cut Network Appliance (NASDAQ: NTAP) to Underperform from Peer Perform on the negative Q1 pre-announcement. Pacific Crest downgraded shares to Sector Perform from Outperform.

• After Pozen (NASDAQ: POZN) received a second approvable letter for Trexima, shares were downgraded by three firms:
  
• To Neutral from Strong Buy at First Albany
  
• To Hold from Buy at Jefferies and Lazard...

• Oppenheimer downgraded Applebee's (NASDAQ: APPB) to Neutral from Buy.

• Gabelli downgraded Boston Beer (NYSE: SAM) to Hold from Buy.

• Lehman downgraded Luxottica (NYSE: LUX) and Clorox (NYSE: CLX) to Equal Weight from Overweight.

• Thomas Weisel downgraded Nortel Networks (NYSE: NT) to Market Weight from Overweight.

Analyst downgrades: APPB, NT, NTAP and SAM originally appeared on BloggingStocks on Fri, 03 Aug 2007 10:54:00 EST. Please see our terms for use of feeds.

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:

Continue reading Sardar Biglari not too happy with Applebee's buyout

Sardar Biglari not too happy with Applebee's buyout originally appeared on BloggingStocks on Thu, 26 Jul 2007 09:45:00 EST. Please see our terms for use of feeds.

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.

If IHOP wants it, should Applebee's sell it? originally appeared on BloggingStocks on Tue, 17 Jul 2007 19:40:00 EST. Please see our terms for use of feeds.

Continue reading IHOP picks up Applebee's

IHOP picks up Applebee's originally appeared on BloggingStocks on Mon, 16 Jul 2007 14:55:00 EST. Please see our terms for use of feeds.

MAJOR PAPERS:

• IHOP (NYSE: IHP), of pancake house fame, is buying Applebee's International Inc (NASDAQ: APPB), the huge casual dining restaurant chain, for $2.2 billion in a deal concluded last night, reported the Wall Street Journal (subscription required).
• Vodafone Group (NYSE: VOD) is looking at a possible $160 billion bid for Verizon Communications Inc (NYSE: VZ), reported the Financial Times (subscription required).

• The U.K. Times reported that Ford Motor Company (NYSE: F) is preparing to sell Volvo, the Swedish car group it bought eight years ago, in a move that could raise $8 billion.
• The Observer reported that BHP Billiton (NYSE: BHP) is lining up a £20 billion bid for Alcoa Inc (NYSE: AA), after its bid for rival Alcan Inc (NYSE: AL) was trumped by Rio Tinto (NYSE: RTP).
• Large American Internet companies, possibly including Google Inc (NASDAQ: GOOG) and Yahoo Inc (NASDAQ: YHOO), are considering snapping up Rediff.com India (NASDAQ: REDF), which runs one of India's most popular consumer Internet portals, reported the Hindustan Times.

Newspaper wrap-up 7-16-07: IHOP buying Applebee's originally appeared on BloggingStocks on Mon, 16 Jul 2007 09:30:00 EST. Please see our terms for use of feeds.

I'm not sure why IHOP want its, but it got it. IHOP (NYSE: IHP) has agreed to buy Applebee's (NASDAQ: APPB) for $25.50 a share, or $2.2 billion. The deal comes at a premium of just 4.6% to Friday's closing price, and stock traded above $26 as recently as last month. The deal probably won't be too pleasing to the company's major shareholders like Richard Breeden, who is credited with forcing the sale of the company.

But I'm not surprised by the low price the company fetched, and I've thought since the beginning that Breeden was barking up the wrong tree. On June 29th, I wrote about the epic tale of the Decline and Fall of Applebee's. Even company founder T.J. Palmer has blasted that company, saying that "It doesn't have anything that would make me want to come back."

Maybe IHOP can work some magic and turn the chain around, but it might be difficult. The company is financing the entire acquisition with debt, and may not be so quick to provide the face lift the restaurants so badly need.

But then again, IHOP's revenue in 2006 was lower than it was in 2002. So maybe this is a case of two drunken sailors trying to hold each other up. There's nothing much to get excited about for shareholders of either company.

IHOP gobbles up Applebee's originally appeared on BloggingStocks on Mon, 16 Jul 2007 08:01:00 EST. Please see our terms for use of feeds.

Before the bell 7-16-07: Stocks may start lower originally appeared on BloggingStocks on Mon, 16 Jul 2007 07:53:00 EST. Please see our terms for use of feeds.

BKC is trans-fat-free originally appeared on BloggingStocks on Fri, 06 Jul 2007 15:15:00 EST. Please see our terms for use of feeds.

In a bizarre case of life imitating Bart (sorry, couldn't help it), 7-Eleven has transformed a dozen stores into Kwik-E-Marts, even offering Simpsons-exclusive products like Buzz Cola, KrustyO's cereal and Squishees. The transformation comes as part of the promotional lead-up to the July 27 opening of The Simpsons Movie, the first feature-length version of the popular cartoon.

According to the Associated Press, "For 20th Century Fox Film Corp. and Homer's creators at Gracie Films, the stunt is a cheap way to call attention to their movie, since 7-Eleven is bearing all the costs, which executives of the retail chain put at somewhere in the single millions."

Wow. So far this Kwik-E-Mart stunt has gotten coverage in nearly every media outlet, including CNBC. And none of it has cost Fox a dime! The move comes several years after industry executives turned down an offer to transform select locations of the struggling restaurant chain Applebee's (NASDAQ: APPB) into Hannibal's to coincide with the release of a sequel to Silence of the Lambs.

7-Elevens become Kwik-E-Marts for Simpsons promotion originally appeared on BloggingStocks on Mon, 02 Jul 2007 14:09:00 EST. Please see our terms for use of feeds.

Applebee's International, Inc. (NYSE: APPB) February decision to put itself up for sale could be seen as the company's admission that it's no longer a company that has any growth potential. Its future may be brightest in the hands of a private owner who can cut costs and ring out efficiency away from the glare of Wall Street's demands for growth -- that is if one can be found.

According to today's Wall Street Journal, (subscription required) even the woman who founded the company, T.J. Palmer, doesn't like it: After having visited the restaurant chain regularly for years, Ms. Palmer says, she rarely goes anymore. "It doesn't have anything that would make me want to come back."

What went wrong? Competitors copied Applebee's and the company failed to evolve, leaving the company with a stock price that has been stagnant for 3 and a half years. The company is trying to reinvent itself by attracting more upscale consumers, and has even hired The Food Network's Tyler Florence to revamp the menu.

But second acts in the business world are rare, and Applebee's reputation is working against it. My college-age friends refer to the chain as Crapplebee's, and the company doesn't really seem to be part of the modern restaurant landscape in any meaningful way.

Given the fact that the Applebee's brand appears to be losing value as hipper chains cramp its style, I'm going to make a bold prediction: The company's search for a buyer will be unsuccessful, and shareholders will continue to reap returns that are about as boring as the food on the menu at Applebee's.

The decline and fall of Applebee's originally appeared on BloggingStocks on Fri, 29 Jun 2007 17:15:00 EST. Please see our terms for use of feeds.

MAJOR PAPERS:

• The Wall Street Journal (subscription required) highlighted the struggles of casual dining chain Applebee's International (NADSAQ: APPB), where even the company's founder said "[Applebee's] doesn't have anything that would make me want to come back".

• According to the U.K. Times, Vodafone Group (NYSE: VOD) is the favorite to win the European rights for Apple Inc's (NASDAQ: AAPL) iPhone, despite stiff competition from rivals Orange and T-Mobile.
• From BusinessWeek's "Inside Wall Street" column:
• There's talk that Warren Buffett may increase his 17% stake in USG Corporation (NYSE: USG) before the housing cycle turns.
• Demand is surging for Kaydon Corporation's (NYSE: KDN) anti-friction bearings, which are used in robotics, aerospace, and other industries, including wind power equipment.
• Analysts say United Retail Group Inc (NADSAQ: URGI) has perfected fashion for the large womens' market, size 14 and over.

Newspaper wrap-up 6-29-07: The Journal highlights struggling Applebee's originally appeared on BloggingStocks on Fri, 29 Jun 2007 09:15:00 EST. Please see our terms for use of feeds.

I've been waiting for Apple (NASDAQ:AAPL) to do the obvious and buy IHOP (NYSE: IHP), but it seems this is not to be. According to a breaking story on Bloomberg, IHOP (formerly know as the International House of Pancakes), the largest flapjack chain in the country, has made a hefty offer of more than $2 billion for Applebee's (NASDAQ: APPB). While Applebee's market cap of $1.92 billion is more that twice that of IHOP's $970 million, the pancake house is know as the home of the big appetite, and they seem ready to chow down.

While IHOP has made their reputation on bountiful down-home grub, Applebee's features a menu with Weight Watchers International-approved, calorie-controlled menu items. Compare their Big Breakfast Combo, three strips of bacon, three sausage links, three ham strips and four eggs, to Applebee's 480-calorie W.W.-approved Tortilla Chicken Melt.

The beauty of this deal is that it would allow IHOP to retain those customers that, due to years of Grand Slam breakfasts, find it necessary to waddle away toward a lighter menu. And when Applebee's customer get that hankering for some grease and grits, the answer is right there in-house.

My hope is that, whomsoever ends up with Applebee's, they have a grammarian on staff that will fight for a correction to the slogan "Eating good in the neighborhood."

I'm thinking, "Dining good in the neighborhood."

IHOP goes for grand slam with offer for Applebee's originally appeared on BloggingStocks on Wed, 13 Jun 2007 17:30:00 EST. Please see our terms for use of feeds.

A former Chairman of the Securities and Exchange Commission, Richard Breeden is now a hedge fund manager. He combines his extensive regulatory skills with value-oriented investment approaches.

One investment was in the struggling restaurant chain, Applebee's International (NASDAQ: APPB). He was even able to snag two board seats.

So what's next? Breeden has purchased a 9.7% stake in Acco Brands Corporation (NYSE: ABD). In the 13D filing, he did not provide many details. Instead, he just seems to think Acco is undervalued.

Acco develops prosaic things like staplers. It's not sexy, but revenues were $445.9 million in the latest quarter.

The problem is that growth has been lagging and the stock price has been sickly this year.

So I have a feeling Breeden will soon provide a list of suggestions for improving things at Acco.

Tom Taulli is the author of various books, including The Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

Hedge fund manager's next stop: Acco Brands originally appeared on BloggingStocks on Wed, 30 May 2007 20:20:00 EST. Please see our terms for use of feeds.