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IHOP Gets a Taste of Applebee's

By Dustin Lushing,  Newser Staff

Posted Jul 16, 2007 10:50 PM CDT

(Newser) – 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.

An IHOP restaurant sign is shown in Burbank, Calif., Monday, July 16, 2007. IHOP's CEO Julia Stewart has been making bold moves to revitalize the 45-year old chain best known for its pancakes and its blue-tiled roofs. With a $1.9 billion bid for the bar-and-grill chain Applebee's, she may...
An IHOP restaurant sign is shown in Burbank, Calif., Monday, July 16, 2007. IHOP's CEO Julia Stewart has been making bold moves to revitalize the 45-year old chain best known for its pancakes and its...   (Associated Press)
Waitress Letty Hernandez serves breakfast Monday, July 16, 2007, at an IHOP restaurant in Burbank, Calif.  IHOP on Monday made a $1.9 billion bid for the bar-and-grill chain Applebee's. (AP Photo/Nick Ut)
Waitress Letty Hernandez serves breakfast Monday, July 16, 2007, at an IHOP restaurant in Burbank, Calif. IHOP on Monday made a $1.9 billion bid for the bar-and-grill chain Applebee's. (AP Photo/Nick...   (Associated Press)
Lynette Hanes delivers food to a customer of the Carside To Go service at an Applebee's restaurant in Overland Park, Kan. in this July 29, 2004 file photo. IHOP Corp., best known for its chain of blue-roofed pancake restaurants, agrees to buy the bar-and-grill chain Applebee's International Inc. for about...
Lynette Hanes delivers food to a customer of the Carside To Go service at an Applebee's restaurant in Overland Park, Kan. in this July 29, 2004 file photo. IHOP Corp., best known for its chain of blue-roofed...   (Associated Press)
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Related links

IHOP's official site
International House of Pancakes

Applebee's official site
Applebee's Restaurant

More info on the franchise-only model
MarketWatch

US Money

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