Wendy’s/Arby’s Group said on Monday that it would sell a controlling stake in its Arby’s restaurant chain to Roark Capital Group for $130m in cash, marking the latest casual dining chain to be scooped up by private equity.
Roark, which is based in Atlanta, will also assume $190m in debt with the acquisition of Arby’s, which has 3,600 quick-service sandwich restaurants across the US.
“This transaction provides substantial value to our stockholders, as it is expected to be accretive to earnings, deleverage the balance sheet and allow us to devote our full attention and resources on the exciting growth opportunities we have at Wendy’s,” Roland Smith, Wendy’s/Arby’s chief executive, said in a statement.
Mr Smith said he would work to revive the menu, expand breakfast offerings and update the restaurants within the Wendy’s chain, which has been rapidly losing market share to McDonald’s.
Wendy’s/Arby’s will keep an 18.5 per cent stake in Arby’s.
Roark specialises in brand management of restaurant companies and Neal Aronson, its chief executive, said he looked forward to helping Arby’s reach its full potential. The group also has stakes in Atkins Nutrionals, Auntie Anne’s, Cinnabon and Moe’s Southwest Grill.
Restaurant companies have been struggling to keep up with rising food costs and have become ripe targets for private equity groups. Last month, California Pizza Kitchen agreed to a $470m buyout by Golden Gate Capital, and groups are circling Sbarro, the recently bankrupt pizza chain.
In January, Yum! Brands, which owns KFC and Pizza Hut, put its Long John Silver and A&W All-American Food restaurant chains up for sale.
Shares of Wendy’s/Arby’s were up by nearly 3 per cent to 4.65 in mid-day trading on Monday.