M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

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Thursday, June 14, 2007

AHOP :)

The winner of the funnest takeover rumor of the week is undoubtedly today's one that Ihop Corp. has made a $2 billion plus offer to acquire Applebee's International Inc.  Applebee's current stock-market value is about $1.92 billion.  (see the Bloomberg story here).  The rumor is not surprising given the heated M&A rumor mill and the significant M&A activity occurring in the restaurant sector.  Just earlier this week, Back Yard Burgers Inc., a southern regional burger chain, announced an agreement to be acquired by an investment consortium comprising Cherokee Advisors, Pharos Capital Group, LLC, based in Nashville, Tennessee and C. Stephen Lynn, former Chairman and CEO of Shoney’s, Inc. and Sonic Corp, in a transaction valued at $38 million. 

Moreover, Applebee's in particular has come under pressure from the investor Richard Breeden.   In April, Applebees settled Breeden's proxy contest for four board seats by giving Breeden and one of his nominees board seats.  At that time, Applebee's also announced it had received several takeover proposals.

But enough background -- the combination is simple fun  -- the nation's largest pancake house and, well, Applebee's -- which I would definitely call AHop.  And think of the potential to achieve tremendous synergies and cost savings in not only pancakes (happy face and otherwise), but pork and other good old American staples.  In a similar vein, Dealbreaker calls the combination Ihoppabees and has compiled a list of analysts comments much funnier than mine.  Here they are:

“The merger will never go through for antitrust reasons. The resulting chain would be too American, and therefore subject to a host of patent violations."

"A combination of IHOP and Applebees would be an unstoppable force in the American suburb. People wouldn't leave, and the branches would develop into self-sufficient communities like the Arcologies in SimCity 2000 or the Bio-Dome invented by Pauly Shore or your average Wal Mart Super Center.”

“If you thought soccer moms were dangerous now or that ratings of Two and a Half Men were artificially inflated, just wait until IHOP buys Applebees. I don’t think the result will be a society any of us want to live in.”

“The last thing your inspirational high school indoor track assistant coach needs is a stack of pancakes to soak up his tears after learning that his picture made the restaurant wall. That’s what a $16 barrel of oriental chicken salad is for.”

“America is not ready for a Pancake and Riblet Platter.”

There is no humor like analyst humor.  Thank you Dealbreaker for compiling it.

http://lawprofessors.typepad.com/mergers/2007/06/ahop.html

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