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Arby's Restaurant Group Inc. on Tuesday, Nov. 28, said it had entered into a definitive agreement to buy Buffalo Wild Wings (BWLD)  in a long-awaited deal that sent shares of the restaurant operator surging in premarket trading.

Buffalo Wild Wings shares surged 6.4% in early trading. Shares have gained more than 40% over the past three months as talk about a possible merger heated up.

Arby's offered $157 per Buffalo Wild Wings share in cash, valuing the company at about $2.9 billion, including net debt. The agreement was unanimously approved by the boards of both companies and represents a premium of roughyl 38% to the company's 30-day volume-weighted average stock price as of Nov. 13, the latest trading day prior to news reports speculating about a potential transaction.

The merger is expected to close during the first quarter of 2018, subject to the approval of BWW shareholders and the satisfaction of customary closing conditions, including applicable regulatory approvals. Arby's is majority owned by affiliates of private-equity firm Roark Capital Group.

On completion, Buffalo Wild Wings will be a privately-held subsidiary of Arby's and will continue to be operated as an independent brand. Arby's well-regarded CEO Paul Brown will lead the combined company. 

"Our strategy is to create the premier operator, franchisor and employer in the restaurant industry comprised of highly differentiated, industry leading brands," Brown tells TheStreet about the logic behind the deal. "Bringing Buffalo Wild Wings and Arby's together under one parent company is a strong and important next step in this journey."

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Brown says his team was attracted to Buffalo Wild Wings for several reasons:

  • Highly differentiated, and a segment-leading restaurant company.
  • A brand with strong positioning and consumer appeal worldwide.
  • Both an accomplished operator and franchisor of restaurants.
  • A strong record of unit development.
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"We are excited about this merger and confident Arby's represents an excellent partner for Buffalo Wild Wings," Sally Smith, CEO of Buffalo Wild Wings said in a statement.

"We are confident that the strength of our two industry-leading brands, under the sponsorship of Roark Capital -- an experienced restaurant and food service investor -- will enable us to capitalize on significant growth opportunities in the years ahead," Smith added.

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