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Arby’s sold to Roark Capital for $430M

Wendy’s/Arby’s Group Inc. said Monday it has agreed to sell a majority stake of Arby’s Restaurant Group Inc. to Roark Capital Group in a deal valued at $430 million.

Atlanta-based Wendy’s/Arby’s Group will retain an 18.5-percent ownership interest in Arby’s, the operator and franchisor of more than 3,600 restaurants worldwide. The ownership stake is valued at $30 million. According to Wendy’s/Arby’s Group, the company will receive $130 million in cash upon the closure of the deal and the buyer will assume about $190 million of Arby’s-related debt, consisting primarily of capital lease and sale-leaseback obligations. The aggregate deal value includes Wendy’s/Arby’s tax benefits of $80 million.

The deal is expected to close early in the third quarter.

“This transaction provides substantial value to our stockholders, as it is expected to be accretive to earnings, deleverage the balance sheet and allow us to devote our full attention and resources on the exciting growth opportunities we have at Wendy’s,” Roland Smith, chief executive at Wendy’s/Arby’s Group said in a statement. “The opportunities include revitalization of our core menu, expanding breakfast, modernizing our facilities, building new restaurants in the United States and pursuing global expansion.”

Atlanta-based Roark Capital has been on an acquisition spree in the restaurant industry, announcing today that it had purchased Il Fornaio America Corp., which owns the Il Fornaio and Corner Bakery Café brands, from Bruckmann Rosser Sherrill & Co.

Other restaurants added to Roark Capital’s roster in the past few years include Wingstop Restaurants Inc. and McAlister’s Deli, to go along with Atlanta-based Focus Brands, the franchisor of Cinnabon, Carvel, Schlotzky’s and Moe’s Southwest Grill.

“This is an exciting day for Roark as well as Arby’s,” Neal Aronson, managing partner of Roark Capital, said in a statement. “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.”

According to securities analyst John Glass at Morgan Stanley, the deal includes commitments from Roark to invest immediately in the Arby’s system.

“Roark Capital will immediately inject $50 million of capital into the business and has commitments to add another $50 million over time, giving Arby's a welcomed capital injection,” he said in a note to investors Monday.

To focus its attention on the nearly 7,000-unit Wendy’s system, Wendy’s/Arby’s began to look for strategic options surrounding Arby’s in January.

Contact Mark Brandau at [email protected].
Follow him on Twitter: @Mark_from_NRN

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