Arby's buying Wendy's

[Made in the USA]

Better watch out Arby's, Big Dave's ghost may come back and get you!! I suppose Wendy's quality will go to poop now, as the new owner tries to "cut expenses"?


Arby's owner buying Wendy's for $2.34 billion in stock
By MARK WILLIAMS
AP Business Writer


After two past rejections, the owner of Arby's shaved roast beef sandwich restaurants is buying Wendy's, the fast-food chain famous for its made-to-order square hamburgers and chocolate Frosty dessert, for around $2 billion.
Triarc Companies Inc., which is owned by billionaire investor Nelson Peltz, said Thursday, April 24, 2008, it will pay about $2.34 billion in an all-stock deal for Wendy's, the nation's third-largest hamburger chain started in 1969 by Dave Thomas. Popular fast food eateries Arby's and Wendy's are shown adjacent to one another along "fast food row" near downtown Jackson, Miss., Thursday, April 24, 2008. After two past rejections, the owner of Arby's shaved roast beef sandwich restaurants is buying Wendy's, the fast-food chain famous for its made-to-order square hamburgers and chocolate Frosty dessert, for around $2 billion. Arby's restaurant is seen Thursday, April 24, 2008 in Columbus, Ohio. The owner of Arby's said Thursday it is buying Wendy's International Inc. in an all-stock deal worth $2.34 billion that comes after the burger chain's board rejected at least two earlier offers by the company. Triarc Companies Inc., which is owned by billionaire investor Nelson Peltz, will pay about $26.78 per share for the company, which has about 87 million shares outstanding. The price is a premium of 6 percent from the company's closing price of $25.32 Wednesday. Arby's restaurant sign is seen Thursday, April 24, 2008, in Columbus, Ohio. The owner of Arby's said Thursday it is buying Wendy's International Inc., in an all-stock deal worth $2.34 billion that comes after the burger chain's board rejected at least two earlier offers by the company. Triarc Companies Inc., which is owned by billionaire investor Nelson Peltz, will pay about $26.78 per share for the company, which has about 87 million shares outstanding. The price is a premium of 6 percent from the company's closing price of $25.32 Wednesday. Arby's restaurant sign is seen Thursday, April 24, 2008 in Columbus, Ohio. The owner of Arby's said Thursday it is buying Wendy's International Inc. in an all-stock deal worth $2.34 billion that comes after the burger chain's board rejected at least two earlier offers by the company. Triarc Companies Inc., which is owned by billionaire investor Nelson Peltz, will pay about $26.78 per share for the company, which has about 87 million shares outstanding. The price is a premium of 6 percent from the company's closing price of $25.32 Wednesday. Wendy's restaurant sign is seen Thursday, April 24, 2008 in Columbus, Ohio. The owner of Arby's said Thursday it is buying Wendy's International Inc. in an all-stock deal worth $2.34 billion that comes after the burger chain's board rejected at least two earlier offers by the company. Triarc Companies Inc., which is owned by billionaire investor Nelson Peltz, will pay about $26.78 per share for the company, which has about 87 million shares outstanding. The price is a premium of 6 percent from the company's closing price of $25.32 Wednesday. Wendy's restaurant sign is seen Thursday, April 24, 2008, in Columbus, Ohio. The owner of Arby's said Thursday it is buying Wendy's International Inc. in an all-stock deal worth $2.34 billion that comes after the burger chain's board rejected at least two earlier offers by the company. Triarc Companies Inc., which is owned by billionaire investor Nelson Peltz, will pay about $26.78 per share for the company, which has about 87 million shares outstanding. The price is a premium of 6 percent from the company's closing price of $25.32 Wednesday. In this March 1, 2007 file photo, walls full of memorabilia and decorations are seen at the very first Wendy's restaurant in Columbus, Ohio. The owner of Arby's on Thursday, April 24, 2008 said it is buying Wendy's International Inc. in an all-stock deal worth $2.34 billion that comes after the burger chain's board rejected at least two earlier offers by the company.



COLUMBUS, Ohio - The billionaire investor known for pushing corporations to make changes to boost their stock price has a new challenge: turning around one of the fast-food industry's more notable names and doing it during a slumping economy.

Atlanta-based Triarc Cos., owned by Nelson Peltz, said Thursday it will pay about $2.34 billion in an all-stock deal for Wendy's International Inc., the nation's third-largest hamburger chain, known for its square hamburger and chocolate Frosty dessert.

Peltz has pushed for change at Wendy's - including the spinoff of the Tim Hortons coffee-and-doughnut chain and cutting corporate expenses - since 2005 to increase the company's stock price. His Trian Fund and his allies own 9.8 percent of Wendy's stock.

It's a similar tactic Peltz has used at other companies where Trian has become a significant investor, such as Cadbury Schweppes PLC and H.J. Heinz Co. Trian also owns shares of Tiffany & Co. and The Cheesecake Factory Inc., according to regulatory filings.

The deal comes as Wendy's struggles with declining profits and weak sales compared with rivals McDonald's Corp. and Burger King Holdings Inc.

Wendy's said Thursday that its first-quarter profit fell 72 percent to $4.1 million, or 5 cents a share, in part because of expenses tied to the work of a special board committee that has been studying ways to boost the company's stock. Revenue fell to $513 million from $522 million a year ago.

Sales at company-owned stores open at least a year, considered a key indicator of a retailer's strength, fell 1.6 percent in the quarter. So-called same-store sales at U.S. franchise restaurants fell 0.1 percent.

Wendy's also has failed to connect with consumers in several advertising campaigns since founder Dave Thomas' death in 2002. Thomas, always wearing a white short-sleeved shirt and red tie, became a household face when he began pitching his burgers and fries in television commercials in 1989.

The company also found limited success in adding new products.

"It's a company that's sort of lost its way," said Bob Goldin, executive vice president of Technomic Inc. in Chicago.

Still, even with a slumping economy in which other restaurant chains have seen sales decline recently, there is value, analysts say.

"We've always felt Wendy's had a decent chance of a turnaround in its business," said John Owens, an investment analyst with Morningstar, citing its new chicken wrap sandwich and the addition of breakfast at many restaurants.

Improved cost controls over food, labor and other expenses should generate $100 million a year in operating profits over time, Triarc said in the statement announcing the deal.

Eliminating duplicate corporate functions and streamlining support services are expected to eventually save $60 million, said Triarc, which operates 3,700 Arby's restaurants.

Triarc also said expansions for both brands are planned for the U.S. and overseas and that the company will look at a dual-concept unit in high-cost real estate markets. Triarc said it will also change its name to include the Wendy's name.

Thomas' family took the news hard.

"It's a very sad day for Wendy's and our family. We just didn't think this would be the outcome," said Thomas' daughter, Pam Farber, 53.

If her father were alive to hear news of the buyout, "he would not be amused," she said.

Under the terms of the deal, expected to close in the second half of the year, Wendy's shareholders will receive 4.25 shares of Triarc Class A stock for each share of Wendy's stock. Triarc said its shareholders will have to approve a charter amendment in which each share of its Class B stock will be converted into Class A stock.

Based on Triarc shares' closing price Wednesday, Triarc is paying about $26.78 per share for Wendy's, which has about 87 million shares outstanding. The offer is well below the $37 to $41 per share that Peltz said he was ready to offer for the company last summer.

Wendy's shares traded as high as $42.22 last year, shortly after the company announced the formation of a special committee to boost the stock price. The shares rose $1.07, or 4.2 percent, to $26.39 Thursday.

Several lunchtime customers at a Wendy's in Columbus wondered how Thomas would have reacted to the news of a sale, were he still alive.

"I think he's probably rolling over in his grave right now," said John Knape, 36. "But it's business, and that's what you need to do to survive, right?"

The deal caps two chaotic years for Wendy's in which it has sold or spun off operations, slashed its corporate staff and had its wholesome image tarnished by a woman who falsely claimed she found part of a finger in her chili.

Farber said the family didn't think much of Peltz's and Triarc's tactics.

"They came after them (Wendy's) and came after them and came after them. They spun Tim Hortons off, they did this, they did that. They did everything they asked but it wasn't enough."

Thomas opened his first restaurant in a former steakhouse in downtown Columbus on Nov. 15, 1969. He named the chain after his 8-year-old daughter Melinda Lou - nicknamed Wendy by her siblings.

Wendy's, based in suburban Dublin, now operates about 6,600 restaurants in the United States and abroad.

[K C Muffin]

Yeah, we'll start seeing Arbendy's now - just like Kentacohut. I do agree with the cost saving, though. If they save on the overhead of corporate execs and infrastructure alone, the savings will be huge. I've never had a keen love for either of them. We have a new place up here that's challenging the drive-throughs here. Called Five Guys. The burgers rock! And they serve fries in huge drink cups. We spent $20 for hubby, step-son and me the other night, but the food was great. The fries actually tasted like fried potatoes, not the deep-fat fried fat stuff we normally get.