IHOP Bids on Applebee's

IHOP Corp. is reported to have made an offer to buy Applebee's, a struggling restaurant chain. Reports Bloomberg, "The bid was for more than $2 billion". "[Applebees] began seeking a buyer after shareholder Breeden Capital Management LLC nominated four board candidates in December and called the stock's performance a 'disaster'."

Applebee's net income has been sliding for eight quarters while IHOP's profit has fallen for three of the past four quarters. IHOP has about 1,300 locations and Applebee's has roughly 1,900 casual-dining restaurants.

IHOP's Chief Executive Officer, Julia Stewart, was president of Applebee's from 1998 to 2001. Stewart says, "We are looking for a non-competitive restaurant concept that is already franchising or able to be franchised that is of sufficient size and could be acquired at a reasonable price.''

Observes writer Rick Munarriz of the Motley Fool, "This smells as fruity as a Rooty Tooty Fresh 'N Fruity, the more I think about it. Sure, IHOP CEO Julia Stewart worked at Applebee's several years ago. That seems to be about the only thing that makes sense in this potential pairing."

"I have no doubt that Applebee's will find a suitor, though my gut tells me that it will come from private equity circles. The combination of IHOP, a breakfast specialist, and a lunch and dinner heavyweight like Applebee's would accomplish what, exactly? Can anyone picture an IHOP/Applebee's multi-concept unit under the same roof to make the most of all three dayparts?"