The Arby's chain has long been a drag on Wendy's/Arby's financials, generally underperforming the Wendy's chain. "Wendy's can put this behind them and move on," Rostan said. Wendy's/Arby's announced the agreement to sell Arby's to private equity firm Roark Capital Group for $430 million on Monday. Under the terms of the deal, Wendy's/Arby's will retain an 18.5% stake in Arby's, a point Rostan found particularly interesting, calling the clause "schmuck insurance," allowing Wendy's/Arby's "to capture some upside if the turnaround of Arby's is successful."
Rostan compared Wendy's/Arby's "schmuck insurance" to the 35% stake in Skype that eBay ( EBAY) retained after selling most of it to Microsoft ( MSFT). eBay bought Skype for $2.6 billion in 2005, "dramatically" overpaying for the Internet phone service in Rostan's view, and was then forced to write down the acquisition. Then in 2009 eBay sold a 65% stake in Skype to an investor group led by private equity firm Silver Lake Partners. In May of this year Microsoft acquired Skype for $8.5 billion in cash, giving eBay a chance to finally profit from its investment. "By keeping the 35% minority stake, eBay avoided looking like a schmuck as a Skype investor," Rostan explained. Wendy's/Arby's shares jumped 6.4% to close at $4.85 on Tuesday, a day after announcing the Arby's deal. Nearly 12.9 million shares changed hands, more than double the issue's three-month average daily volume of just 5.1 million. -- Written by Miriam Marcus Reimer in New York. >To contact the writer of this article, click here: Miriam Reimer. >To follow the writer on Twitter, go to http://twitter.com/miriamsmarket. >To submit a news tip, send an email to: email@example.com.
>>See our new stock quote page. Get more stock ideas and investing advice on our sister site, Stockpickr.com.