Breakfast giant International House of Pancakes is acquiring the bar-and-grill chain Applebee's for $1.9B, or $25.50 a share—4.6% higher than Friday's closing price. IHOP will turn most of Applebee's 508 restaurants into franchises at a rate of 40 per quarter beginning in 2008, a move that execs hope will cut costs and revitalize the struggling pancake maker.
"We believe over time we will create a business model with a lower-risk profile and superior cash-flow characteristics," said IHOP's Chief Executive. News of the transaction sent IHOP shares soaring to $4.99 today, or 8.9%, closing at $61.24. Applebee's stock jumped 2% to $24.91.