Wendy’s Agrees to Arby’s Acquisition

Wendy’s International Inc. (Dublin, Ohio) has agreed to sell itself for about $2.3 billion to Triarc Cos. Inc. (New York), parent of the Arby’s Restaurant Group Inc. (Atlanta). Triarc chairman Nelson Peltz is also a significant Wendy’s shareholder and has been aggressively pushing the troubled fast-food chain to make changes for three years.

Wendy’s and Triarc agreed to a stock swap in which Wendy’s shareholders will receive 4.25 shares of Triarc for each of their shares. The deal will create one of the nation’s largest fast-food chains. Combined, Wendy’s and Arby’s will have 10,000 restaurants and sales of about $12.5 billion, though they will still be run as separate units.

Triarc ceo Roland Smith will assume the same role at Wendy’s. Triarc will assume the Wendy’s name after the closing of the deal, expected in the second half of the year.

“We believe the combination of Arby’s and Wendy’s will create a powerful new restaurant company and a ‘must own’ restaurant stock with significant upside potential,” Smith said in a statement.

The companies said they planned to expand their breakfast and snack offerings, an effort meant largely to catch up with McDonald’s and Burger King. Some stores, mostly those in markets with expensive real estate, may feature both Wendy’s and Arby’s units.

Wendy’s has struggled since the death in 2002 of its founder and spokesman, Dave Thomas. These days, it is contending with a worsening outlook for restaurants and higher prices for ingredients like beef and chicken as well as increased transportation costs. It recently reported a 72 percent drop in operating profit for its first quarter. Revenue fell nearly 2 percent and same-store sales were down 1.6 percent, down 0.1 percent at U.S. franchise restaurants.

Thomas’ daughter, Pam Thomas Farber, told the Associated Press that the family was devastated by the news. “It’s a very sad day for Wendy’s, and our family,” she said. “We just didn’t think this would be the outcome.” If her father were alive to hear news of the buyout, “he would not be amused,” she said.