Wendy’s Considers Possible Sale of Arby’s Chain
Stock Chart for Wendy's Co/The (WEN)
Wendy’s/Arby’s Group Inc., the third-biggest U.S. hamburger chain, plans to explore a possible sale of the Arby’s brand to focus on the faster-growing Wendy’s restaurants.
UBS AG will help in the process, the Atlanta-based company said today in a statement. Arby’s, which has almost 3,700 restaurants in the U.S., had sales of $1.14 billion in 2009, less than half the amount of the Wendy’s group.
Getting rid of the chain will help management sharpen its focus on expanding the 6,500-store Wendy’s franchise, whose same-store sales have performed better than Arby’s. The move marks a reversal for billionaire Nelson Peltz, who pushed to unite the restaurant brands in 2008.
“The Wendy’s brand, given its relative size and scope, is the key driver of shareholder return, and we believe we should focus on the execution of the compelling growth opportunities at Wendy’s,” Peltz said in the statement. His Trian Fund Management LP is Wendy’s/Arby’s largest investor. Anne Tarbell, a spokeswoman for Peltz, didn’t immediately return a phone call before regular business hours.
Wendy’s/Arby’s rose 8.5 percent to $4.85 in trading before exchanges opened, after closing at $4.47 yesterday on the New York Stock Exchange. The stock had declined 5.7 percent in the 12 months before today.
Since the $2.56 billion all-stock deal closed Sept. 29, 2008, the shares had fallen 24 percent before today. That compared with a 47 percent rise in the Standard & Poor’s Supercomposite Restaurants Index.
Peltz’s new direction follows similar moves by other restaurant companies. Yum! Brands Inc., owner of the KFC and Taco Bell chains, said this week that it will put the Long John Silver’s chain up for sale, along with its A&W All-American Food restaurants. In September, Benihana Inc., which operates Japanese-themed restaurants, said it hired Jefferies & Co. to explore a possible sale.
In the past five years through 2010, there have been more than 300 transactions involving North American restaurant chains, according to data compiled by Bloomberg. In September, Burger King Holdings Inc. agreed to be acquired by New York investment firm 3G Capital for about $3.3 billion.
Wendy’s/Arby’s plans to release preliminary fourth-quarter and full-year results on Jan. 26. In November, Wendy’s/Arby’s lowered sales and profit forecasts for the year, sending the shares down the most in six months.
In the third quarter, sales at stores open at least 15 months fell 1.7 percent at North American Wendy’s sites, compared with a 5.9 percent decline at Arby’s.
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