The terms of the agreement provide for Wendy’s/Arby’s Group to receive at closing approximately $130 million of cash, subject to customary adjustments, and retain an 18.5% common stock interest in the Arby’s business expected to be valued at approximately $30 million. The buyer will assume approximately $190 million of Arby’s-related debt, consisting primarily of capital lease and sale-leaseback obligations. The terms of the transaction will trigger an income tax benefit to Wendy’s/Arby’s Group valued at an estimated $80 million, which Wendy’s/Arby’s Group currently expects to realize over the next few years.
“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,” said Roland Smith, president and chief executive officer of Wendy’s/Arby’s Group. “These opportunities include revitalization of our core menu, expanding breakfast, modernizing our facilities, building new restaurants in the United States and pursuing global expansion.
“As we move through this transition year, we are laying the groundwork for Wendy’s to deliver 10% to 15% average annual EBITDA growth in 2012 and beyond. We view Wendy’s as one of the most attractive growth stories in the quick-service restaurant industry.”
Neal Aronson, managing partner of Roark Capital Group, said, “This is an exciting day for Roark as well as Arby’s. Arby’s has more than 47 years of offering unique, high quality and better-tasting alternatives to traditional fast food. We look forward to working with Arby’s President Hala Moddelmog and the dedicated employees and franchisees to help this great brand achieve its full potential.”
The transaction is expected to close early in the third quarter.
In a separate announcement, Roark Capital Group said it has acquired Fornaio (America) Corp., owner of Corner Bakery Cafe and Il Fornaio Restaurants and Bakeries. Financial terms were not disclosed.
Founded in 1991 as a small bread bakery in Chicago, Corner Bakery Cafe now is based in Dallas and operates 119 locations nationwide. Corner Bakery launched a strategic franchise development program in 2007 to attract seasoned franchise partners with multi-unit restaurant and retail experience.
Founded in Italy and based in Corte Madera, Calif., Il Fornaio owns and operates 22 full-service Italian restaurants in California and across the United States that serve Italian cuisine based on authentic regional Italian recipes. Il Fornaio’s wholesale bakeries produce a wide variety of hand-made bread, pastries and other artisan baked goods for sale at their own locations and to grocers and food service customers across the United States.
“The partnership with Roark is a perfect fit, providing each brand with unique opportunities,” said Mike Hislop, chief executive officer of Il Fornaio (America) Corp. “Our ability to leverage Roark’s strong background and extensive resources within the franchise and restaurant industries allows us to better serve our current Corner Bakery Cafe partners, while accelerating our pursuit of new franchisees.”
With the acquisition of Corner Bakery Cafe and Il Fornaio, Roark now has invested in 20 franchise businesses that operate in 50 states and 43 countries. Corner Bakery Cafe and Il Fornaio will be Roark’s 10th restaurant investment along with FOCUS Brands, parent company of Carvel Ice Cream, Cinnabon, Schlotzsky’s, Moe’s Southwest Grill, Auntie Anne’s Pretzel’s and the franchisor of Seattle’s Best Coffee on certain military bases and in certain international markets, as well as McAlister’s Deli, and Wingstop.