IHOP Corporation announced its plans to buy Applebee’s International Inc. for $25.50 per share, as the newly restructured company seeks growth outside its pancake chain. IHOP franchises almost all of its restaurants, and believes it can improve the currently struggling chain by franchising a majority of Applebee’s 508 company-operated restaurants.
Applebee’s said earlier this year it was reviewing strategic alternatives for its business and that in April it received several takeover proposals. Applebee’s was struggling to keep up with the competition, while IHOP sought new growth opportunities following a recent restructuring that has transformed it into a franchiser with more than 99% of its 1,319 restaurants owned and operated by franchisees.
On Monday, July 16, 2007 shares of IHOP increased nearly nine percent after agreeing to buy Applebee’s International for $1.9 billion according to the New York Times.