Posted on 04/24/2008 7:24:09 PM PDT by kingattax
Roast Beef Sandwich Chain Buys Square Burger Biz For $2 Billion
(AP) 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 it will pay about $2.34 billion in an all-stock deal for the nation's third-largest hamburger chain started in 1969 by Dave Thomas. Wendy's had rejected at least two buyout offers from Triarc.
Thomas' daughter Pam Thomas Farber said the family was devastated by the news.
"It's a very sad day for Wendy's, and our family. We just didn't think this would be the outcome," said Farber, 53.
If her father were alive to hear news of the buyout, "he would not be amused," she said.
Thomas became a household face when he began pitching his burgers and fries in television commercials in 1989.
Wendy's International Inc. deferred comment to Triarc, which had nothing further to say right away.
Triarc 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.
Under the terms of the deal, which is expected to close in the second half of the year, shareholders at Wendy's will receive 4.25 shares of Triarc Class A stock for each share of Wendy's stock they own.
Atlanta-based 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.
The Wendy's board has been studying strategic alternatives since early last year, and expenses related to that contributed to the company's 72 percent drop in first-quarter earning announced Thursday.
Wendy's said its profits totaled $4.1 million, or 5 cents, a share for the quarter ended March 30 compared with a profit of $14.7 million, or 15 cents a share, a year ago. Revenue was down slightly to $513 million from $522 million a year ago.
Wendy's stock is well off its high for the past year of $42.22 that it reached shortly after the committee began its work in the summer. It fell 3 cents to $25.39 in early trading Thursday.
Sales have slid in a struggling economy that has hurt other restaurant chains, too.
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.
Triarc said it will also change its name to include the Wendy's name.
Pushed by activist shareholders, Wendy's spun off its Tim Hortons coffee-and-doughnut chain and sold its money-losing Baja Fresh Mexican Grill. Chairman and CEO Jack Schuessler abruptly retired in March 2006, months after a woman and her husband were sentenced to prison for extortion for their plot in March 2005 to plant part of a human finger in a bowl of chili at a San Jose, Calif., Wendy's restaurant and claiming it was served to her.
Farber said the family didn't think much of Peltz' 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."
Farber said she had just gotten off the phone with her sister Wendy, 46, the company's namesake.
"She's feeling horrible. She just is devastated," Farber said.
Farber said the family had a supported an alternate bid led by Wendy's franchisee David Karam, president of Cedar Enterprises Inc.
"We knew what Dave Karam's commitment was to Wendy's, his family's commitment — just as ours. His dad was a very good friend of our dad's and was one of the very first franchisees, so there's a lot of history."
Peltz, who runs the Trian Fund, and his allies own 9.8 percent of Wendy's stock. Arby's has more than 3,000 restaurants.
He had argued in a letter to Wendy's chairman James Pickett that Triac would be a natural buyer of Wendy's. Peltz gained three seats on the company's board last year.
Thomas, who died in 2002, opened his first restaurant in a former steakhouse on a cold, snowy Saturday in downtown Columbus on Nov. 15, 1969. He named the chain after his 8-year-old daughter Melinda Lou — nicknamed Wendy by her siblings.
The smiling Thomas, always wearing a white short-sleeved shirt and red tie, touted the virtues of fast food in humorous ads, often featuring big-name stars such as bluesman B.B. King and soap opera queen Susan Lucci. He appeared in more than 800 ads.
Wendy's, based in suburban Dublin, operates about 6,600 restaurants in the United States and abroad. It trails McDonald's and Burger King Holdings Inc. in the burger business.
Well before I call it a night, I’ll leave with a story about Arby’s that still makes me smile:
When Arby’s first came on the scene, the closest one to us was in Laurel Maryland where U.S. 1 and MD 198 intersected (as I recall) right in the middle of Laurel.
After church on Sunday, my parents and I would pick up one of our dogs (we had two, ‘Duke’, a toy manchester, and ‘Duchess’ who was pure chihuahua), and off to Arby’s we would go.
My Dad, being the kind of guy he was, would always buy an extra roast beef sandwich, feed half of it to Duke, and we would take the other half home to Duchess. Dad would feed Duke by hand and trained him to eat it politely without grabbing. It was impressive, lol
But the fun part of the show was when we returned home, and Duchess would meet us at the door, yapping as a chihuahua would do, and upon smelling that roast beef on Duke’s breath, would commence to chew him up, growl and snap at him (as in “how DARE you heat roast beef in my absence?!?” lol), until we would unfurl the other half of that roast beef sandwich and she would get her share of the meal.
Those were fun times I’ll never forget.
G’nite all. :)
Yep...Dave Thomas is probably spinnin’, but we can always go here and donate to slow him down some:
http://www.davethomasfoundationforadoption.org/
Mmmm.....Double-R-Bar Burgers....lived on ‘em in high school.
Last time I was in a RR (years ago), the Double-R-Bar was no longer on the menu at that particular store, but if you asked for it, they’d make you one. So I did. :-)
This is a sad story though. Now Wendy’s can suck as bad as Arby’s.
GMUSL 96
Maybe Pepsi can swallow up Arby’s. After all, Pepsico already owns Taco Bell, Pizza Hut and Kentucky Fried Chicken.
We can have a Kentucky Fried Taco Pizza Chicken Roast Beef Burger Heaven.
They can duke it out with McDonald’s.
I’m all for capitalism, but I much prefer the local burger joint when it comes to my personal tastes. That, or White Castle. I love the jalapeno cheeseburgers. Mmmmm...
I don’t know about the business end of it...but I love Wendy’s HotNSpicy Chicken Sandwich (w/lettuce, tomoato, and onion only...why, oh why do they insist on mayo on hot sandwiches...yuck!). Anyways, the spicing of the HotnSpicy is just about perfect (for a fast food item). Burger King has a ‘version’ of a spicy chicken sandwich...too much heat, but not enough flavor (back to the kitchen for that creepy King!!!)
I believe Pepsico spun that all off into Yum Brands (NYSE: YUM).
I’ll admit I’m a dufus when it comes down to the NYSE. What exactly does “spun off” mean?
Does that mean they have no association with Yum Brands or is it just another branch of Pepsico?
I think Pepsi started a company called YUM, put all these brands in it, and issued shares of YUM to PEP shareholders. The result is two separate companies.
I'm so hungry, I could eat at Arby's!
Thanks for the explanation.
I have a rudimentary understanding of the markets. Wish I had more. My aunt was a whiz at playing stocks and made a fortune. I wish I would’ve have gleaned her knowledge a little more before she died.
Wendy’s do not toast their hamburger buns. That has always been a sore spot for me.
I worked at an original Arby’s (unit #54, in Ft. Wayne, IN.) in high school in the mid to late 60s. They used inside top round back then and the best was the one that spun in the chains in the glass display out front. We always nibbled off that bad boy when it came out. Damn that was tasty beef! No more...SSZ
You're from Fort Wayne? Not too far from Fort Wayne, I learned to ski on Lake Wawasee and I still have some relatives in the area.
I used to stop at Roy's all the time back in the late 70's and 80's. Excellent roast beef and fried chicken. Then Hardee's bought out Roy Roger's. Hardee's eventually dumped them. There is still a Roy Roger's chain, but from what I've heard, the roast beef is just not the same as it was 20-30 years ago.
I don't buy anything at Sonic. The owners and/or top management are big time liberals who donate heavily to the Democrats and every liberal "cause" that comes down the pike. They have a right to donate to whoever and whatever they want, but I have a right to spend my money at places which don't use any of it to elect liberals and promote liberal "causes" that are destroying my country.
Take a look HERE for lists of big contributors to both liberal and conservative candidates and causes.
Wawa? Wawa is a great lake. Lots of history. Learned to ski, swim and fish there. Unfortunately, too many people are buying up a lot of all the old cottages and turning two or three of them into McMansions. Totally ruining the character and charm of the lake.
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