July 15, 2024

DealBook: Wendy’s Sells Arby’s to Private Equity Group

Wendy’s/Arby’s Group announced Monday that it had found a buyer, Roark Capital Group, for its Arby’s chain.

Arby’s, known for its roast beef sandwiches, had been on the block since January. Under the terms of the deal, Wendy’s will receive $130 million in cash at the closing and keep an 18.5 percent stake in the Arby’s business, an interest valued at $30 million. Roark, a private equity firm based in Atlanta, will assume $190 million worth of Arby’s debt. The deal, the companies said, is expected to generate a tax benefit of $80 million for Wendy’s. As a result, the total value of the deal was estimated to be $430 million.

Wendy’s and Arby’s had merged in 2008 in a $2.3 billion deal orchestrated by investor Nelson Peltz in 2008 after he had pushed for changes at Wendy’s International for several years.

Mr. Peltz, the biggest investors in Wendy’s/Arby’s, said as recently as February that the company had been approached by possible suitors who were not identified. But he said at the time that the company would focus on its strategy to sell the Arby’s chain, which has nearly 3,700 restaurants in the United States. Arby’s has been a weaker performer than Wendy’s in recent years.

Shares of Wendy’s were up sharply in pre-market trading on Monday.

“This transaction provides substantial value to our stockholders, as it is expected to be accretive to earnings, deleverage the balance sheet and allow us to devote our full attention and resources on the exciting growth opportunities we have at Wendy’s,” Roland Smith, Wendy’s/Arby’s chief executive, said in a statement.

Roark has 20 franchises in its portfolio that operate in 50 states and 43 countries, including Cinnabon, Auntie Ann’s and Carvel Ice Cream franchises. The firm has also agreed to invest an additional $50 million in Arby’s through 2013.

Arby’s was one of several fast-food chains on the block. Yum Brands is selling Long John’s Silver and AW All-American Food.

UBS and the law firm of Paul, Weiss, Rifkind, Wharton Garrison advised Wendy’s. King Spalding and DLA Piper are serving as legal advisers to Roark Capital Group.

Article source: http://feeds.nytimes.com/click.phdo?i=f81362ad79f08fdd8ddfd211c0994908

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