Two investment firms offered $39 a share for the franchisor behind Applebee's and IHOP. It is the second take-private bid for a major franchisor this week.
For the second time in a week, investors want to take a big, almost fully franchised restaurant company off the stock market. This time the target owns Applebee's and IHOP.
Cobblers Cove Capital and Arkhouse Management submitted an offer to Dine Brands' board on Monday worth $39 a share in cash, Bloomberg reported Oct. 28, citing people familiar with the matter. That is about a 33% premium to the stock's average price over the prior 30 days. Dine shares closed up 8.3% that day at $34.68.
The board moved fast. Dine said its directors unanimously adopted a limited-duration shareholder rights agreement, better known as a poison pill. Under the plan, if a passive investor acquires more than 20% of the shares, or an activist acquires 10%, other shareholders can buy additional stock at a 50% discount, Nation's Restaurant News reported. That matters here: Bloomberg reported the two firms already have exposure to nearly 20% of Dine's shares through various financial instruments, and that they are willing to raise their price after due diligence and access to management.
Cobblers Cove is a newly established firm based in Charleston, South Carolina. Arkhouse has done take-private deals before, and the two firms worked with other investors last year on a $1 billion deal for retailer Family Dollar, according to NRN.
What a buyer would get is mostly a royalty stream. Dine ended its second quarter with 1,557 Applebee's and 1,813 IHOP restaurants worldwide, plus 97 Fuzzy's Taco Shop locations in the U.S., according to FSR, and nearly all of them are run by franchisees. Their health is uneven. Applebee's domestic same-store sales fell 1.8% in the quarter ended June 28 on lower traffic. IHOP rose 1.5%, but only because higher checks offset fewer guests. Fuzzy's same-store sales climbed 4.6%, yet its system sales fell 5.3% as the chain closed stores, shrinking from 113 shops a year earlier, NRN reported.
The timing invites comparison with Trian's $7.35-a-share bid for Wendy's, made public the same day and backed by Flynn Group, one of Wendy's largest franchisees. That group put its argument in a public letter: a turnaround needs patient private capital. The Dine offer surfaced through unnamed sources instead, so franchisees have no stated plan to read yet.
They may get one soon. Dine reports third-quarter results Nov. 4, one day before Wendy's, which means two franchisors with buyout offers on the table will face analysts back to back.
Revscale Media (illustration)Out West Restaurant Group runs 61 Outbacks and owes nearly $320 million. Bloomin' Brands has offered $26.3 million to take the restaurants back, which would pull most of Outback's U.S. franchise system in-house.
Yum BrandsYum Brands ended its deal with Encanto Restaurants, and every KFC and Taco Bell on the island closed Monday. Some employees learned about it at the door.
Revscale Media (illustration)The nearly 200-unit iced tea chain becomes the third brand at a restaurant-only sales firm whose team includes the IFA's board chair.
Revscale Media (illustration)Yum says drive-thru voice AI lifts satisfaction 6% and sales about 1.5% where it runs. Taco Bell U.S. same-store sales still fell 4% in the quarter.
TGI FridaysA creditor trustee says former owner TriArtisan drained the chain for a decade. The new management says two more U.S. franchisees are weeks away.
Revscale Media (illustration)The deal folds an AI front office for home care agencies into a scheduling platform that says more than 900 agencies use it.
