Arby's parent company buys out Wendy's

By Chris McGregor

ATLANTA-Arby's parent company has purchased Wendy's International in a blockbuster deal creating the third largest fast food company in North America.

In late April, Triarc Companies Inc., owned by Nelson Peltz, paid $2.34 billion for Wendy's in an all-stock deal and bringing nearly 10,000 restaurants under the Triarc umbrella.

With the merger, Triarc is now in control of $12.5 billion in annual sales from the two chains. The new company will be renamed to include the Wendy's brand.

Triarc paid $26.78 per share for Wendy's with the merged company being led by current Triarc chief executive officer Roland Smith, replacing Wendy's CEO and president Kerrii Anderson.

The boards of both companies approved of the latest deal with Wendy's shareholders will get 4.25 Triarc shares for every one Wendy's stock they own.

Wendy's said its profits in the first quarter of 2008 equaled $4.1 million compared to the $14.7 million it made a year ago, a drop of 72 per cent in total earnings. Sales revenues in the quarter fell 1.5 per cent from $522 million last year to $513 million in 2008.

The burger chain has been fighting off declining profits thanks to a worsening economy and increased competition. The company sold off some of its assets including Tim Hortons and Baja Fresh Mexican Grill in an attempt to cut costs.

Anderson said she was not satisfied with the financial numbers announced at the same time news of the merger broke.

"We know we must do better and we are focused on driving sales and performance in future quarters," Anderson said in a news release.

"After a very challenging January, same-store sales were better in February and March.  April same-store sales, which benefit from the Easter holiday shift, are running positive month to date."

In the statement announcing the deal, Triarc said the plan calls for a primary focus on new additions to the breakfast daypart along with global expansion of both the Arby's and Wendy's, acquisitions and building of new restaurants.

The merged company is also looking at combining both brands under one roof similar to what Wendy's had done with Tim Hortons.

"Working together with the Wendy's team, we expect to improve margins significantly at Wendy's company-owned stores," Smith said in a statement.

This buyout was Triarc's third attempt at taking over Wendy's, started by Dave Thomas in the late 1960s.

Worldwide, Wendy's has 6,600 locations while Arby's runs 3,000 stores