Arby’s, owned by affiliates of the Atlanta-based Roark Capital Group, announced on Tuesday, November 28 that it is planning to acquire Buffalo Wild Wings for $2.9 million, including debt, adding to its growing portfolio of U.S. restaurants.
The chain will become a unit of Arby’s but will continue to operate as an independent brand. The boards of directors for both restaurant companies unanimously approved the plan.The deal marks the end of a turbulent year for Buffalo Wild Wings, which conceded three board seats to the hedge fund and activist investor Marcato Capital Management, prompting Sally Smith, chief executive officer, to announce her retirement after two decades at Buffalo Wild Wings.
Marcato, owns a 6.4 percent state in Buffalo Wild Wings and had pressured the board to pursue strategies that the hedge fund said would boost the company’s stock price. Marcato, which owns approximately 6.4 percent of the outstanding shares of Buffalo Wild Wings, voted in favor of the deal.
Under the agreement, Roark will pay $157 per share for Buffalo Wild Wings. Roark also owns stakes in burger chains Hardee’s and Carl’s Jr as well as the bakery chain Cinnabon. Roark will provide all the equity financing for the deal, expected to close in the first quarter of 2018, subject to approval of Buffalo Wild Wings shareholders, and the satisfaction of customary closing conditions, including applicable regularly approvals.
Buffalo Wild Wings reported better-than-expected profit for the first time in a year in October, helped by cost-cutting and a change in its promotional strategy, to overcome a spike in chicken wing prices.
“Buffalo Wild Wings is one of the most distinctive and successful entertainment and casual dining restaurant companies in America,” Arby’s CEO Paul Brown said in a press release. “We are excited to welcome a brand with such a rich heritage, led by an exceptionally talented team. We look forward to leveraging the combined strengths of both organizations into a truly differentiated and transformative multi-brand restaurant company.”
Following the close of the transaction, Buffalo Wild Wings will become a privately-held subsidiary of Arby’s Restaurant Group, and will continue to be operated as an independent brand. Paul Brown will serve as CEO of the parent company.
Roark Capital Group focuses on investing in franchised and multi-unit businesses in the restaurant, retail and other consumer sectors. Affiliates of Roark are committing all of the equity that, together with the proceeds of debt financing, will be necessary to complete the transaction.
