M&A

Arby’s-Wendy’s Combo Finally Finds the Beef

In a tough environment for restaurants, the long battle by Peltz's Triarc ends with $2.34B all-stock agreement.
Stephen TaubApril 24, 2008

The year-long pursuit of Wendy’s International Inc. by Triarc Cos. and billionaire owner Nelson Peltz, who also controls the Arby’s chain, ended with a $2.34 billion all-stock deal for the restaurant company.

The Wendy’s board had turned down at least two prior offers, according to the Associated Press. The board relented at an offer of 4.25 Triarc shares for each share of Wendy’s, a $26.78-a-share price that included a 5.7-percent premium, Bloomberg News calculated.

Triarc, as franchisor of the Arby’s restaurant system, would have about 10,000 restaurant units, and pro forma annual system sales of $12.5 billion, when Wendy’s and Arby’s are combined company. That would make it the nation’s third largest fast-food chain. Triarc said it would change its corporate name after the merger to include the “Wendy’s” brand. Still, Arby’s and Wendy’s will operate as autonomous brand business units.

Bloomberg said that Wendy’s CEO Kerrii Anderson, its former CFO, had failed to keep up with new-product introductions by competitors, leading to the pressure for a merger. According to a report in Portfolio.com, Triarc CEO Roland Smith will replace her at Wendy’s while also remaining CEO of the combined company.

The deal, however, comes during a significant slump in the restaurant business, from low-end to high-end. An article in the Wall Street Journal today details the soaring costs and falling demand in the current U.S. economy.

Peltz’s hedge fund, Trian, is the largest Wendy’s shareholder, with 9.8 percent, and has been agitating for change for some time.

Under the deal, Triarc’s shareholders will be asked to approve a charter amendment converting each share of Triarc Class B common, Series 1, into one share of its Class A Common Stock, resulting in a post-merger company with a single class of common stock.