Dine Brands, the parent company of Applebee’s, IHOP, and Fuzzy’s Taco Shop, has rejected a buyout proposal from investment firms Arkhouse Management and Cobblers Cove Capital, arguing that the offer substantially undervalues the company.
According to a regulatory filing Tuesday, Dine’s board received the unsolicited, nonbinding proposal October 26 and subsequently reviewed it with assistance from outside advisors.
The board determined the offer was inadequate and formally notified the investment firms of its rejection in an October 29 letter.
The decision comes days after Bloomberg reported that Arkhouse and Cobblers Cove were seeking to acquire Dine. The proposed $39-per-share transaction represented a premium of approximately 33 percent to the company’s average share price over the preceding 30 days. Bloomberg also reported that the investment firms were willing to increase their offer pending due diligence and access to Dine’s management.
Following reports of the potential acquisition, Dine’s board unanimously adopted a limited-duration shareholder rights agreement, commonly known as a poison pill. The measure is designed to prevent an investor from acquiring a controlling stake without offering an appropriate premium to all shareholders. It also gives the board additional time to evaluate potential transactions and protect shareholder interests.
Dine reports its Q3 earnings on Wednesday.
