News Column

Wendy's Agrees To Sell Arby's to Private Group

June 13, 2011

Tracy Turner

Wendy's/Arby's Group has sold its struggling Arby's chain to a private-equity firm in a deal that will allow the company to keep an 18.5 percent ownership stake in the roast-beef sandwich chain.

The deal also likely means that Wendy's could move its headquarters back to central Ohio from Atlanta, where Wendy's/Arby's has been based.

Although some of Wendy's operations never left the company's former Dublin home, the sale probably would result in the restoration of its corporate headquarters here and additional jobs, Wendy's/Arby's CEO Roland Smith said.

"This is the definitive agreement," Wendy's spokesman Bob Bertini said in an email. "We have not finalized our plans, but hope to grow our presence in central Ohio."

The deal, which includes cash, debt assumption and other considerations, is valued at an estimated $430 million. Roark Capital Group, which operates Cinnabon, Auntie Ann's and Carvel Ice Cream franchises, will pay $130 million in cash at the closing for Arby's, the two companies said.

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. Wendy's also will keep the 18.5 percent stake in the Arby's business, an interest valued at $30 million, the companies said.

The deal will allow Wendy's/Arby's to "devote our full attention and resources on the exciting growth opportunities we have at Wendy's," Smith said.

It also "provides substantial value to our stockholders, as it is expected to be accretive to earnings," Smith said in a statement.

The sale of Arby's would allow Wendy's -- without Arby's -- "to realign" into a "more profitable brand," Smith said.

Wendy's/Arby's Group announced in January that it was exploring the sale of Arby's so it could focus on Wendy's, the nation's No. 3 hamburger chain. The company also factored its planned sale of the Arby's chain into its 2011 earnings predictions, Smith said.

The sale of Arby's would allow the company to focus on expanding Wendy's beyond its 6,500 stores and pay more attention to product innovation, Smith said.

Wendy's consistently has performed better than Arby's since the two came together in 2008, when Wendy's was bought by Triarc Cos., which owned Arby's and is controlled by investor Nelson Peltz.

The deal is expected to close in the third quarter, the companies said.


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