Wendy's/Arby's Group Considers Spinning Off Arby's
Wendy's/Arby's Group (WEN), the third-largest fast food company in the U.S., said Thursday it is considering selling the Arby's Restaurant Group to focus on the Wendy's brand.
Arby's is the second-largest quick-service sandwich chain in the U.S. with nearly 3,700 restaurants, the company said. While Arby's has posted same-store sales declines in some recent quarters, in the fourth quarter of 2010, company-operated stores saw a 3.1% same-store sales growth.
"However, despite Arby's positive momentum, the reality is that the Wendy's brand, given its relative size and scope, is the key driver of shareholder return, and we believe we should focus on the execution of the compelling growth opportunities at Wendy's," said activist investor Nelson Peltz, who is also chairman of the holding company.
Peltz has been pushing for such a move, saying Wendy's is better positioned to compete in this market. Arby's performance during the economic downturn lagged behind that of Wendy's.
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Wendy's currently has more than 6,500 restaurants in more than 20 countries. "A pure-play Wendy's will enable us to focus all of our energies on growing the Wendy's brand via new store growth both in North America and international markets, and with accelerated same-store sales through the introduction of new dayparts and core menu innovation," said president and CEO Roland Smith.
According to The Wall Street Journal, Peltz's hedge fund, Trian Fund Management LP, owns a 24.3% stake in the company, which was created through the 2008 merger of the Arby's and Wendy's chains. Wendy's/Arby's joins a long list of fast food restaurant companies that are trying to reposition themselves as the economy improves through deals, new menu options and store remodeling.
Wendy's/Arby's said it had hired UBS Investment Bank (UBS) to assist in the sale process.
Shares of Wendy's/Arby's jumped by as much as 6% in premarket trading Thursday to $4.80.
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