IHOP Buys Applebee's for $2.1 Billion

IHOP has sealed a deal to buy Applebee's International, the largest U.S. casual-dining chain, for about $2.1 billion. The combined company would have 3,250 restaurants and sales of $7 billion.

IHOP's CEO, Ms. Julia Stewart, an ex-president of Applebee's, maneuvered IHOP to acquire Applebee's. The deal comes at a time in which mid-priced restaurants are experiencing one of the industry's worst slumps. High gas prices has eaten into the wallets of middle-class consumers, whom Applebee's built its dining empire on.

Wall Street notes that the mouse has gobbled up the lion. IHOP's market capitalization is roughly half that of Applebee's. Having taken on substantial debt to fund the purchase, IHOP plans to franchise most of Applebee's 500 company-owned restaurants and sell its real estate to pay down the debt.

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