Atlanta / GA. (wag) Wendy´s / Arby´s Group Inc. announced a definitive agreement for the sale of Arby´s Restaurant Group Inc. to a buyer formed by Roark Capital Group. Wendy´s/Arby´s Group will retain an 18,5 percent ownership interest in the Arby´s business. Atlanta-based Arby´s is the second largest quick-service sandwich chain in the U.S. with more than 3’600 restaurants system-wide. Roark Capital Group is an Atlanta-based private equity firm that focuses on investing in franchise, brand management and restaurant companies. Wendy´s/Arby´s Group in January had announced that it was exploring strategic alternatives for Arby´s.
The aggregate transaction value is estimated to be 430 million USD. The terms of the agreement provide for Wendy´s/Arby´s Group to receive at closing approximately 130 million USD of cash, subject to customary adjustments, and retain an 18,5 percent common stock interest in the Arby´s business expected to be valued at approximately 30 million USD. The buyer will assume approximately 190 million USD of Arby´s-related debt, consisting primarily of capital lease and sale-leaseback obligations. The terms of the transaction will trigger an income tax benefit to Wendy´s/Arby´s Group valued at an estimated 80 million USD, which Wendy´s/Arby´s Group currently expects to realize over the next few years.
Roland Smith, President and Chief Executive Officer of Wendy´s/Arby´s Group: «This transaction provides substantial value to our stockholders, as it is expected to be accretive to earnings, de-leverage the balance sheet and allow us to devote our full attention and resources on the exciting growth opportunities we have at Wendy´s. These opportunities include revitalization of our core menu, expanding breakfast, modernizing our facilities, building new restaurants in the United States and pursuing global expansion. As we move through this transition year, we are laying the groundwork for Wendy´s to deliver ten percent to 15 percent average annual Ebitda growth in 2012 and beyond. We view Wendy´s as one of the most attractive growth stories in the quick-service restaurant industry».
Smith added: «Roark Capital Group has a proven history of success as an investor and value-added partner to its portfolio companies with significant expertise in franchise and restaurant sectors. We are very pleased to be partnering with Roark on this transaction, which we believe will benefit all of Arby´s stakeholders».
Neal Aronson, Managing Partner of Roark Capital Group: «This is an exciting day for Roark as well as Arby´s. Arby´s has more than 47 years of offering unique, high quality and better-tasting alternatives to traditional fast food. We look forward to working with Arby´s President Hala Moddelmog and the dedicated employees and franchisees to help this great brand achieve its full potential».
Wendy´s/Arby´s Group expects that Arby´s will be reported as a discontinued operation in Wendy´s/Arby´s Group´s second quarter 2011 financial results. The transaction is expected to close early in the third quarter and is subject to regulatory approvals and customary closing conditions, including the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The agreement provides for post-closing adjustments to the purchase price, based primarily on net working capital. There can be no assurance that the transaction will be completed.
Arby´s Ownership
At closing, Roark will invest 180 million USD and own a 180 million USD non-dividend paying preferred stock interest and an 81,5 percent common stock interest. Roark´s investment will be used to pay the cash portion of the purchase price, buyer transaction expenses and to provide liquidity and growth capital for the Arby´s business. In addition, Roark will commit to invest into Arby´s, under certain circumstances, an additional 50 million USD through 2013, as needed, to provide liquidity and growth capital and would receive preferred stock in return for that additional investment. Wendy´s/Arby´s Group will own an 18,5 percent common stock interest. For a more detailed explanation of the transaction, please review the Form 8-K filed with the Securities and Exchange Commission and visit the investor relations page of the Company´s website at wendysarbys.com.
Financial and Legal Advisors
UBS Investment Bank acted as financial advisor to Wendy´s/Arby´s Group Inc. Paul, Weiss, Rifkind, Wharton + Garrison LLP is serving as legal advisor to the Company. King + Spalding LLP and DLA Piper LLP are serving as legal advisors to Roark Capital Group.
About Wendy´s/Arby´s Group Inc.
Wendy´s / Arby´s Group Inc. is the third largest quick-service restaurant company in the United States and includes Wendy´s International Inc., the franchisor of the Wendy´s restaurant system, and Arby´s Restaurant Group Inc., the franchisor of the Arby´s restaurant system. The combined restaurant systems include more than 10’000 restaurants in the U.S. and 26 other countries and U.S. territories worldwide.
