DineEquity up as shareholder takes increased role

NEW YORK - A shareholder of DineEquity Inc., which operates the IHOP and Applebee's restaurant chains, filed a Securities and Exchange Commission form on Friday to take a more active role in the company, leading to a big boost in the share price.

Shares jumped $2.33, or 19.3 percent, to $14.39 in afternoon trading.

The stockholder — Southeastern Asset Management Inc. — is an investment adviser which buys shares in undervalued companies on behalf of its clients.

The company filed a form to convert its ownership stake into one that allows for a more active role in the company, including the ability to have discussions with third parties about proposed business transactions.

In the filing, Southeastern said it will also have conversations with management and third parties about how to maximize shareholder value.

Southeastern owns about 3.2 million shares, or about 18 percent of the company's outstanding shares.

DineEquity's stock has dropped significantly over the past year and is now trading well below its highest price for the year of $55.77.

The company has been hit hard by the tightening credit markets, which have made it harder for restaurant companies to secure credit for franchisees looking to by locations. DineEquity is selling Applebee's locations to franchisees and using the profits to pay down debt from acquiring the chain. If fewer franchisees can get credit to buy the locations, the company may not be able to pay down as much of its debt.

That, combined with slower consumers spending affecting the entire restaurant industry, has spooked investors.

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