Combination Brings Together Two Leading Restaurant Brands and Creates Significant Opportunities to Generate Shareholder ValueGLENDALE, CA, Nov 29, 2007 (MARKET WIRE via COMTEX News Network) -- IHOP Corp. (NYSE: IHP) today announced that it successfully
completed the acquisition of Applebee's International, Inc. for
$25.50 per share in cash, representing a total transaction value of
approximately $2.1 billion. With more than 3,250 restaurants, the
combination brings together two leading restaurant brands and creates
the largest full service restaurant company in the world.
Julia A. Stewart, IHOP Corp. Chairman and Chief Executive Officer,
said, "We are delighted to complete the acquisition of Applebee's as
it represents an opportunity to create significant long-term value for
IHOP shareholders over and above what we could have achieved on a
standalone basis. Additionally, we believe that our core competencies
of re-energizing restaurant brands, franchising and expense management
are ideally suited to improve Applebee's overall brand and financial
health. We look forward to applying the same focus and discipline that
we have employed successfully at IHOP over the last several years to
generate meaningful and sustainable improvements within the Applebee's
Business Model Transformation
As previously announced, IHOP Corp. intends to franchise the majority
of Applebee's 510 company-owned restaurants as it transitions the
business to a highly franchised system. This fundamental business
transformation is expected to significantly enhance IHOP Corp.'s cash
generating profile resulting from:
-- Franchising approximately 475 Applebee's company-owned and operated
restaurants by the end of 2010. The Company has begun to cultivate a
pipeline of new and existing franchisees who have expressed interest in
buying company-operated Applebee's restaurants. Efforts are already
underway to sell specific company markets with the expectation of
completing the sale of select markets in early 2008.
-- Selling Applebee's-owned real estate and executing related leasebacks.
The Company has selected an advisor and begun the marketing of this real
estate to likely buyers. The sales are expected to be completed sometime
in early 2008.
-- Significantly reducing General & Administrative expenses at Applebee's
over the next three years in line with franchising Applebee's operated
restaurants as well as through efficiencies created by integration efforts.
-- Significantly reducing capital expenditures as Applebee's quickly
transitions out of its more capital intensive company operations model to a
highly franchised model.
Stewart said, "The investor proposition presented by IHOP's
acquisition of Applebee's centers on the fundamental business model
transformation we intend to implement at the company. This
transition will allow us to benefit from the low capital expenditure,
high cash flow generating characteristics enjoyed by a highly
Applebee's Re-Energizing Efforts
Management intends to take a comprehensive approach to re-energizing
the Applebee's brand with the goal of returning to positive
system-wide same-store sales growth over time as enhanced marketing
and operational strategies take hold. The Company is currently
establishing the strategic plan and tactical elements that are
expected to strengthen Applebee's competitive position.
"Of utmost importance is the brand positioning which will serve as a
filter for the menu, advertising, marketing, restaurant remodel
package and new restaurant prototype initiatives that will be
designed to re-energize the Applebee's brand. Additionally, the
operations efficiencies and franchise development strategies will be
a top priority. Together, these efforts will serve to establish a
strong point of differentiation for the Applebee's brand and enhance
its competitive position over time," said Stewart.
Additional Investor Information
Primarily due to the settlement of the interest rate swap transaction
and financing costs related to the swap detailed in a separate news
release today, the Company no longer expects the acquisition of
Applebee's International, Inc. to be accretive to earnings in 2008.
Shares of Applebee's stock will cease to trade on NASDAQ effective
November 30, 2007, while IHOP Corp. stock will continue to trade on
the New York Stock Exchange under ticker symbol "IHP." IHOP expects
to file consolidated historical pro forma financial statements for
the combined company with the Securities and Exchange Commission by
February 12, 2008. The Company expects to provide information
regarding purchase price accounting sometime during the first quarter
2008. Additionally, IHOP currently expects to report fourth quarter
and fiscal 2007 financial results and issue 2008 financial
performance guidance on Wednesday, February 27, 2008.
About IHOP Corp.
The IHOP family restaurant chain has been serving a wide variety of
breakfast, lunch and dinner selections for nearly 50 years. Offering
14 types of pancakes as well as omelettes, breakfast specialties,
burgers, sandwiches, salads, chicken and steaks, IHOP's diverse menu
appeals to people of all ages. IHOP restaurants are franchised and
operated by Glendale, California-based IHOP Corp. As of September
30, 2007, the end of IHOP's third quarter, there were 1,328 IHOP
restaurants in 49 states, Canada, Mexico and the U.S. Virgin Islands.
IHOP Corp. common stock is listed and traded on the NYSE under the
symbol "IHP." For more information, call the Company's headquarters
at (818) 240-6055 or visit the Company's Web site located at
About Applebee's International, Inc.
Applebee's International, Inc., headquartered in Overland Park, Kan.,
develops, franchises and operates restaurants under the Applebee's
Neighborhood Grill & Bar brand, the largest casual dining concept in
the world. As of November 25, 2007, there were 1,965 Applebee's
restaurants operating system-wide in 49 states, 17 international
countries, and two U.S. territories, of which 510 were company-owned.
Additional information on Applebee's International can be found at
the company's website (www.applebees.com).
There are forward-looking statements contained in this news release.
They use such words as "may," "will," "expect," "believe," "plan," or
other similar terminology, and include statements regarding the
strategic and financial benefits of the acquisition of Applebee's
International, Inc., expectations regarding integration and cost
savings, and other financial guidance. These statements involve known
and unknown risks, uncertainties and other factors, which may cause
the actual results to be materially different than those expressed or
implied in such statements. These factors include, but are not
limited to: the implementation of IHOP's strategic growth plan; the
availability of suitable locations and terms for the sites designated
for development; the ability of franchise developers to fulfill their
commitments to build new restaurants in the numbers and time frames
covered by their development agreements; legislation and government
regulation including the ability to obtain satisfactory regulatory
approvals; risks associated with executing IHOP's strategic plan for
Applebee's; risks associated with IHOP's incurrence of significant
indebtedness to finance the acquisition; the failure to realize the
synergies and other perceived advantages resulting from the
acquisition; costs and potential litigation associated with the
acquisition; the ability to retain key personnel after the
acquisition; conditions beyond IHOP's control such as weather,
natural disasters, disease outbreaks, epidemics or pandemics
impacting IHOP's customers or food supplies or acts of war or
terrorism; availability and cost of materials and labor; cost and
availability of capital; competition; continuing acceptance of the
IHOP, International House of Pancakes and Applebee's brands and
concepts by guests and franchisees; IHOP's and Applebee's overall
marketing, operational and financial performance; economic and
political conditions; adoption of new, or changes in, accounting
policies and practices; and other factors discussed from time to time
in IHOP's and Applebee's news releases, public statements and/or
filings with the Securities and Exchange Commission, especially the
"Risk Factors" sections of IHOP's and Applebee's Annual and Quarterly
Reports on Forms 10-K and 10-Q. Forward-looking information is
provided by IHOP Corp. pursuant to the safe harbor established under
the Private Securities Litigation Reform Act of 1995 and should be
evaluated in the context of these factors. In addition, IHOP
disclaims any intent or obligation to update these forward-looking
Paul Kranhold/Lucy Neugart
Director, Investor Relations
SOURCE: IHOP Corp.