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Dine Brands stockholders to vote on spinning off IHOP

The Applebee's parent has a proxy resolution calling for the company's two brands to be split.
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Photograph: Shutterstock

Stockholders of the company that franchises Applebee’s Neighborhood Grill & Bar will vote next month on whether to pursue a spinoff of the casual chain’s sister concept, IHOP, according to securities filings.  

JCP Investment Partnership is proposing that fellow shareholders join it in voting that Dine Brands Global hire an investment banking firm to begin the divestiture of IHOP. The pancake specialist had been posting better sales growth than its sibling prior to the COVID-19 crisis.

“We believe that the market significantly undervalues the company due to its segments, IHOP and Applebee’s Grill & Bar, having vastly different growth opportunities,” JCP said in a proxy statement supporting its resolution. “IHOP’s same-store sales and net unit growth have outpaced those of Applebee’s by a material amount over the last five years.”

Dine Brands’ board of directors has recommended that shareholders vote against the proposal.

“The board remains open to considering all alternatives that could create value for our stockholders, [but] the board does not believe that a spinoff of IHOP is recommended at this time,” the directors said via proxy in response to JCP’s proposal.

JCP qualified to put the proposal to a vote because it has held a Dine Brands stake worth at least $2,000 for a full year. Its current holding in the company was not revealed.  The investment company is run by James Pappas, the son of Luby's CEO Chris Pappas.  The Pappas family is the operator of a sizeable multi-concept operation based in Houston.

Dine Brands is scheduled to hold its annual meeting at its headquarters on May 12.  But the company advised shareholders that the annual meeting could be convened virtually via remote communications.  

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