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Arby's Operator Triarc Gobbles Up Wendy's

The $2.34 billion purchase agreement will provide an almost 6% premium to the burger seller's closing price Wednesday.
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No. 3 hamburger chain

Wendy's International

(WEN) - Get Wendy's Company (The) Report

on Thursday agreed to be acquired by Arby's franchisor

Triarc Companies


in an all-stock deal worth about $2.34 billion.

The combination, which had been discussed for months, would create a combined chain featuring 10,000 restaurants that generated $12.4 billion in pro forma sales last year, the companies said in a press release. The two chains will continue to be run as separate branded businesses.

Under the deal, Wendy's shareholders would receive 4.25 shares of Triarc Class A common stock for each share of Wendy's common stock. Triarc shares closed down 1.7% to $6.30, a 5.7% premium to Wendy's closing price of $25.32 Wednesday. The total value of the deal, based on 87.4 million Wendy's shares outstanding, is about $2.34 billion.

"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 as we execute on the many opportunities we see to expand and improve these two very valuable brands," Triarc CEO Roland Smith said in a statement.

Triarc plans to change its name to include Wendy's. Smith will assume leadership of the combined company and will take over as CEO of the Wendy's brand. The new board of directors will be expanded to 12 members, including two nominated by Wendy's board, Triarc Chairman Nelson Peltz and Vice Chairman Peter May. Peltz and May own Trian shares comprising 35% of the company's voting power and Trian Partners, an investment firm owning 9.8% of Wendy's stock. Both support the merger.

Separately, Wendy's posted sliding first-quarter profits as the chain focuses on a restructuring and rollout of new products. Income from continuing operations dipped to $4.1 million, or 5 cents a share, vs. $14.5 million, or 15 cents a share, in the year-ago quarter.

Excluding expenses related to the Board's Special Committee and restructuring charges in both 2007 and 2008, Wendy's adjusted income from continuing operations was $8.4 million, or 10 cents a share, vs. $15.1 million, or 16 cents a share. Total revenue slid to $582.2 million, vs. $59 million in the year-ago period. Analysts had forecast a profit of 17 cents on revenue of $573.7 million, according to Thomson Financial.

Wendy's shares were falling 3.2% to $24.50, while Triarc shares were down 1% to $6.24 in recent premarket trading.

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This article was written by a staff member of