DOW JONES NEWSWIRES − Wendy’s/Arby’s Group Inc. agreed to sell most of its struggling Arby’s chain for $130 million in cash to a group led by private-equity firm Roark Capital Group in a deal that leaves it with an 18.5% ownership stake in the fast-food restaurant.
Wendy’s/Arby’s turnaround efforts at Arby’s have helped improve sales, though the company had been under pressure to sell Arby’s because its performance had been lagging until recently. The company said recently it had received multiple bids for the chain.
Under the deal, expected to close in the third quarter, Wendy’s/Arby’s will receive about $130 million in cash, and the 18.5% stock interest in Arby’s is valued at about $30 million. Roark will assume about $190 million of Arby’s related-debt. The transaction triggers a tax benefit of about $80 million to Wendy’s/Arby’s. The parties said the deal has a total value of about $430 million.
Roark will invest about $180 million at the closing, covering the cash portion of the deal, transaction costs and capital for Arby’s. Roark also committed to spend up to an additional $50 million through 2013 in capital.
Wendy’s/Arby’s in May reported that its first-quarter loss narrowed as revenue edged up amid sales growth at Arby’s. However, it lowered its full-year earnings estimate owing to significantly higher commodities costs.
Atlanta-based Roark on Monday also said it has acquired Il Fornaio (America) Corp., owner of the casual-dining chain Corner Bakery Cafe and the upscale Italian Il Fornaio Restaurants & Bakeries business. Terms of the deal weren’t disclosed.
Roark’s food and restaurant holdings also include Focus Brands–parent of chains such as Cinnabon and Carvel Ice Cream.
Wendy’s/Arby’s shares closed Friday at $4.52 and were inactive premarket.