IHOP agrees to acquire Applebee's

by Eric Schroeder
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GLENDALE, CALIF. — IHOP Corp., a restaurant chain serving breakfast, lunch and dinner selections, has reached agreement to acquire Applebee’s International, Inc., Overland Park, Kas., for $25.50 per share, representing a total transaction value of approximately $2.1 billion.

IHOP said it intends to franchise a majority of Applebee’s 508 company-operated restaurants and expects to realize significant cost savings as a result. IHOP said it intends to sell the restaurants at a rate of about 40 a quarter.

"Management will focus on driving marketing and operational improvements aimed at re-energizing Applebee’s system performance," IHOP said. "These changes are expected to result in significant and increasing cash flow over time, which will be used to initially reduce debt incurred in connection with the acquisition. Once debt levels are reduced, IHOP intends to return to its long-term commitment of returning cash to its shareholders through share repurchases."

Dave Goebel, president and chief executive officer of Applebee’s, said the sale "represents the culmination of a comprehensive strategic alternatives process led by the strategy committee of our board of directors to identify the best alternative to create value for Applebee’s shareholders."

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