Applebee's settles pension fund's class suit vs. merger

Nation's Restaurant News, Oct 22, 2007

OVERLAND PARK, KAN. -- Applebee's International Inc. has agreed to settle a class-action lawsuit by a New Jersey construction worker union's pension fund, which alleged that the pending $2.3 billion sale of the company to IHOP Corp. would keep Applebee's shareholders from benefiting from sales of restaurants to franchisees.

Julia Stewart, chief executive of IHOP and a former president of Applebee's, had indicated that financiers of the deal would be paid in part with proceeds from the sales of most of the 508 corporate Applebee's units to franchisees, for about $950 million.

Applebee's reportedly would not pay any money in the settlement with the New Jersey Building Laborers Pension and Annuity Funds but rather agreed to provide shareholders with additional information about the merger.

The pension fund sued Applebee's in Delaware court 10 days after IHOP's intent to purchase the industry's largest casual-dining chain was disclosed in July.

Applebee's shareholders are scheduled to vote on the merger Oct. 30. The deal provides for them to share about $1.9 billion, or $25.50 per share. Including IHOP's assumption of Applebee's debt, the deal is worth about $2.1 billion, or $2.3 billion with financing costs.