M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

A Member of the Law Professor Blogs Network

Wednesday, July 18, 2007

IHOP/Applebees Merger Agreement Filed

IHOP has filed its merger agreement with respect to its $1.9 billion acquisition of Applebees.  The agreement is fairly standard:  A $60 million break fee which is just at 3% of equity value, a no-solicit, two-business day matching right for IHOP with respect to competing bids, and a fairly tight material adverse change clause.  In addition, for those contemplating a transaction with a franchising party, the agreement contains a fairly good franchising representation and warranty in paragraph 4.01(s) of the merger agreement.

In its 8-K filing, IHOP also disclosed that it intends to finance the acquisition with a combination of debt and equity financing.  The debt financing is expected to consist of two separate securitization transactions consisting of an additional issuance of asset-backed notes under the existing IHOP securitization program and the issuance of asset-backed notes under a securitization program to be established for Applebee’s assets.  IHOP has also secured a bridge facility commitment for 2.139 billion from Lehman Brothers to fund the transaction pending the completion of both securitizations. 

The equity financing consists of preferred stock to be sold to an affiliate of MSD Capital, L.P., and affiliates of Chilton Investment Company, LLC.  IHOP has entered into a stock purchase agreement with MSD, pursuant to which MSD has agreed to purchase, concurrently with the closing of the Applebees merger, between $50.0 million and $133.8 million of a newly created series of perpetual preferred stock of IHOP.  In addition, IHOP has entered into a stock purchase agreement with Chilton, pursuant to which Chilton has agreed to purchase, concurrently with the closing of the Applebees merger, $35.0 million of a newly created series of convertible preferred stock of IHOP. 

The merger is not conditioned upon the receipt of financing by IHOP.

http://lawprofessors.typepad.com/mergers/2007/07/ihopapplebees-m.html

Takeovers | Permalink

TrackBack URL for this entry:

http://www.typepad.com/services/trackback/6a00d8341bfae553ef00e0099539358833

Listed below are links to weblogs that reference IHOP/Applebees Merger Agreement Filed:

Comments

Post a comment