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.
I actually like the cheese sauce...LOL.
When I went to Ohio State I worked as a banquet waiter and we really never got tips or anything. However, one night Dave Thomas was there and he gave all of us a 5 dollar tip (that was a big tip in 1983). He always seemed like a good guy.
I had NO interest in slop served at Taco Bell
correction
Oh, please. Lady, your family got rich by using money raised from the equity markets to grow the business. Now those shareholders want to maximize their investment. The restaurants are still going to sell crappy square hamburgers after the sale. What exactly is the big deal?
Now they are small and tasteless …. ;-) Mcdees lite.
Either the portions go down or the price goes up. The consumers pay the price of the acquisition. Sometimes these buyouts make no sense.
You know what that means.......bye to the 99 cent menu at Wendy’s.
its sad. dave thomas would be really upset
I loved Zantigos. Hated it when Taco Bell bought them.
I never had the Roy Rodgers roast beef. I always had their fried chicken, which was the best fast food chicken that I ever tried. Better than Popeye's, better than Church's, and certainly better than Kentucky Fried Rat!
Mark
Either they’ve changed it or we have very different sense of taste.
As for other good fast food, I think Sonic is pretty good.
[$4.1 million, or 5 cents, a share for the quarter ended March 30 compared with a profit of $14.7 million]
Yikes, that really isn’t a lot of money in corporate terms.
Well, if they did, it would be the first time "real meat" was ever served at Arby's!
Mark
For all I know it can be all fingers and toes, they sure press the life out of it.
I'm not sure if I ever found the beef in an Arbys. Love the horsey sauce though.
lol
I am very much relieved.
The only reason I would be mad at that is if I didnt get to spend any of it.
I used to love Wendys. The food quality has gone way downhill. And I can’t even eat there french frys any more. They are just horrible since they went to the new oil. They smell like dead fish, and taste gross. Burgers are smaller, and they taste so greasy. Yuk. They already have gone downhill. I bet it get worse now.
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