Fast-food restaurants set to part company
Source: Agencies |
June 14, 2011, Tuesday
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Print Edition
Print Edition
WENDY'S/ARBY'S Group is to sell a majority stake in its struggling Arby's brand to a group led by Roark Capital Group, the Atlanta private equity firm, it said yesterday.
The move marks the end of a short-lived union between the two fast-food chains, and represents a role reversal. Arby's started as the suitor in the relationship, and ended up on the chopping block.
The announcement comes less than five months after Wendy's/Arby's Group, also based in Atlanta, said it was putting Arby's up for sale.
Roark will pay US$130 million in cash for an 81.5 percent stake in Arby's, and will assume US$190 million worth of Arby's debt. Roark already owns Moe's Southwest Grill, Cinnabon, and other restaurants.
Wendy's/Arby's Group will keep an 18.5 percent stake in Arby's, and will change its name after the deal goes through. The company is considering different options, but the new name will include the word "Wendy's."
Wendy's/Arby's Group values the minority stake it gets in Arby's at US$30 million will also get a tax benefit worth US$80 million.
Wendy's/Arby's Group shares rose 31 cents, or 6.9 percent, to US$4.83 in pre-market trading.
Wendy's and Arby's first came together when billionaire investor Nelson Peltz and his Triarc hedge fund, which owned Arby's, agreed to scoop up Wendy's as well. Peltz remains the company's chairman.
Wendy's/Arby's Group has struggled since its formation in late 2008, losing money for seven of its 10 quarters. CEO Roland Smith has said that selling Arby's will allow the company to focus on Wendy's, which he hopes to expand by launching breakfast in more locations and by opening more restaurants overseas.
The move marks the end of a short-lived union between the two fast-food chains, and represents a role reversal. Arby's started as the suitor in the relationship, and ended up on the chopping block.
The announcement comes less than five months after Wendy's/Arby's Group, also based in Atlanta, said it was putting Arby's up for sale.
Roark will pay US$130 million in cash for an 81.5 percent stake in Arby's, and will assume US$190 million worth of Arby's debt. Roark already owns Moe's Southwest Grill, Cinnabon, and other restaurants.
Wendy's/Arby's Group will keep an 18.5 percent stake in Arby's, and will change its name after the deal goes through. The company is considering different options, but the new name will include the word "Wendy's."
Wendy's/Arby's Group values the minority stake it gets in Arby's at US$30 million will also get a tax benefit worth US$80 million.
Wendy's/Arby's Group shares rose 31 cents, or 6.9 percent, to US$4.83 in pre-market trading.
Wendy's and Arby's first came together when billionaire investor Nelson Peltz and his Triarc hedge fund, which owned Arby's, agreed to scoop up Wendy's as well. Peltz remains the company's chairman.
Wendy's/Arby's Group has struggled since its formation in late 2008, losing money for seven of its 10 quarters. CEO Roland Smith has said that selling Arby's will allow the company to focus on Wendy's, which he hopes to expand by launching breakfast in more locations and by opening more restaurants overseas.
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