By Lisa Kerner
Charlotte, N.C., April 24 - Triarc Cos., Inc., a holding company and the franchisor of the Arby's restaurant system, agreed to acquire Wendy's International, Inc. in an all-stock transaction to create the third-largest U.S. quick service restaurant company, it was announced on Thursday.
Both companies' boards of directors approved the definitive merger agreement that gives Wendy's shareholders a fixed ratio of 4.25 shares of Triarc class A common stock for each share of Wendy's common stock they own, a Triarc news release said.
Triarc said it will ask its shareholders to approve a charter amendment in which each share of Triarc's class B common stock, series 1, will be converted into one share of its class A common stock.
The combined company will operate some 10,000 restaurant units and have pro forma annual system sales of some $12.5 billion, according to the release.
Triarc chief executive officer Roland Smith will also become CEO of Wendy's.
Wendy's and Arby's will continue to operate as autonomous brand business units based in Dublin, Ohio, and Atlanta, respectively.
However, an Atlanta-based consolidated support center will oversee all public company responsibilities and other central service functions, resulting in "substantial corporate overhead savings," Triarc said.
Triarc noted that the new company will focus on daypart expansion, primarily through breakfast; global expansion; and growth through future acquisitions.
Following the transaction's close, expected in the second half of 2008, Triarc will change its name to include "Wendy's."
Triarc's board will be reconstituted and will have 12 members, including two directors nominated by Wendy's.
Nelson Peltz and Peter May, Triarc's chairman and vice chairman, respectively, agreed to vote their shared 35% voting power in favor of the deal.
"We believe the combination of Arby's and Wendy's will create a powerful new restaurant company and a 'must own' restaurant stock with significant upside potential as we execute on the many opportunities we see to expand and improve these two very valuable brands," Smith said in the release.
"Through the execution of major operating improvements and the realization of synergies, we expect to generate substantial value for shareholders," Smith added.
"We believe this transaction with Triarc is in the best interests of all of Wendy's constituencies and represents superior value to what the board anticipates Wendy's would have generated as an independent company," Wendy's chairman James V. Pickett stated.
Wachovia Securities and Merrill Lynch & Co. advised Triarc, while Wendy's was advised by J.P. Morgan Securities Inc. and Greenhill & Co. LLC.
It was previously reported that Wendy's rejected two prior offers from Trian Fund Management, LP, led by May, prompting May to consider calling a special meeting of shareholders to vote on the company's future direction.
One Trian proposal called for the combination of Wendy's and Arby's, and the other involved an acquisition of 100% of Wendy's for more than $900 million in cash with the balance in stock, an April 18 letter from Trian to Wendy's said.
Trian said previously it intended to appear in person or by proxy at the quick service restaurant chain's annual meeting and make proposals to increase and fix the size of the board at 15 directors, to set the numbers of directors in each class and to remove members of the board, if any, that were appointed by the directors of the company after Feb. 4.
In February, Trian said it wanted Wendy's review of strategic options to result in a sale of the company.
On April 25, 2007, Wendy's announced it would review options including a revision to its strategic plan and changes to the capital structure. Wendy's said in June 2007 it was considering a sale of the company.
| Acquirer: | Triarc Cos., Inc.
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| Target: | Wendy's International, Inc.
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| Announcement date: | April 24
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| Price per share: | 4.25 shares of Triarc class A common stock
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| Expected closing: | Second half of 2008
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| Stock price of acquirer: | NYSE: TRY: $6.30 on April 23
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| Stock price of target: | NYSE: WEN: $25.32 on April 23
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