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.
Wow. Just D***. I remember Rax Roast Beef, I thought they were going to mop the floor with Arbys. Then one day Rax was no more and Arbys was left standing. Now Arbys eats up Wendys.
Dave is rolling in his grave.
You may be right. It’s probably been about that long since I’ve eaten there.
I distinctly remember some appalling cheese sauce that was literally inedible.
E Pluribus Pepsi.
They both suck. I’ve always said if anyone came up with healthy, tasty and innovative fast food concept they’d make a mint. Then McDonald’s bought Chipotle. There’s a place in Fort Worth called Fuzzy’s Tacos. They’re phenomenal.
A Marylander owns the Roy Rogers brand. I learned that meeting him at an event I did a few years ago. Not sure how many stores he has but I knew of several. Had a roast beef sandwich at RR in Gaithersburg, MD two Sundays ago. It remains wonderful - the beef is not the pressed and formed style that Arby’s has faded to; and they dip the meat in jus, the thin brown gravy. I love that sandwich with a bit of horseradish sauce. It’s the best roast beef I know of in the fast food space. With the combo, you have your choice of sides including salad, baked beans, and fruit cup as well as the fries and a couple others. This was true before the original chain went bust. The Maryland operator has made a point of preserving the menu mostly as it was.
For the time being, I will continue to allow other people to eat where they wish.
Many years ago, I thought Wendy’s made the greatest hamburgers in the world … over the past decade or so I have watched (and tasted) the decline of this franchise. I guess it is time that they go the way of other great business … purchased by a lesser business, and fade away into oblivion.
It's not their quality I mind, the reuben type stuff is quite good and the old fashioned roast beef sandwiches are OK. It's the prices that kill you. Unless you are doing the five for five sort of thing, it costs 25-30 bucks to feed a family. May as well go to Applebees, or just go home and make wiener-water soup.
Roy Rogers is still in business? They used to have an outlet in downtown Toronto that was pretty good but all of their Canadian shops were gone by the early 1980s.
I used to eat at Roy Rogers in Virginia. I was rowing Crew in college and would stop in and eat a burger dinner and a chicken dinner after Crew practice, before going home and eating dinner. Not that the portions were small, far from it, I was just HUNGRY. They did a great burger and an excellent chicken, the roast beef was top notch as well. Glad to hear they are still going regionally!
Here in Toronto there is a chain called "Made in Japan" that serves excellent meals at fast-food prices. For the cost of a Big Mac you can get beef teriyaki, rice and veggies cooked fresh. Great stuff.
Their used to be a fast taco place in the midwest called Zantigos. Their Taco Burritos were fabulous. They were wrapped up tightly in a real big tortilla. You could eat them when driving. Taco Bell took them all over. It's been 15-20 years, and sometimes I still pause to think how much better life was with access to that fast food item.
Arby’s is nasty........
Now they are buying Wendy’s. They are going to screw with a good fast food joint, the bastards.
Not that Wendy’s has been doing that well lately.....doing weird stuff like the vanilla frosty etc.
But, it is going to go downhill big time now that Arby’s is grabbing hold.
I had one of their pita sandwiches yesterday. Very good.
i agree with you. when wendy’s first opened, the burgers were excellent. (hot and juicy !)
i like photos on the menu......you actually know what you are ordering...
I remember Zantigos. While they were in business I had interest in the slop made at Taco Bell.
No kidding.....really disturbing news.
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