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Big day in corporate food news, Bros! Your favorite chicken wings-slash-sports-bar chain — Buffalo Wild Wings — just bought a big buy out from Roark Capital Group, the parent company of Arby’s. After years of board room drama from activist investors, B-Dubs is selling to Arby’s for $157 per share, making the total acquisition around $2.4 billion.
Via Reuters:
Including debt, the Buffalo Wild Wings deal is valued at about $2.9 billion.
Activist hedge fund Marcato Capital Management, which had put pressure on the company to pursue strategies to boost its stock price, said it would vote for the deal.
Marcato, which owns 6.4 percent of Buffalo Wild Wings, won three seats on the company’s board in June after a sustained campaign criticizing its performance under Chief Executive Sally Smith.
Following the deal close, expected during the first quarter of 2018, Buffalo Wild Wings will become a privately held unit of Arby’s and operate as an independent brand.
The big winner here? Wendy’s, who owns a big chunk of Arby’s. It would make nearly $450 million on such a valuation, according to CNBC:
Currently, Wendy’s owns about 18.5 percent of Arby’s, with their stake valued at around $325.9 million, as of the third quarter this year.
“This implies a value of $1.76 billion for Arby’s,” Stifel analyst Chris O’Cull wrote in a research note Tuesday. “Following the acquisition of BWLD, Arby’s Restaurant Group excluding debt would theoretically be valued at roughly $4.2 billion.”
Wendy’s stake would then be valued at $775 million before tax, O’Cull said. And that is a big boon for the burger chain.
“Prior to the acquisition, the Arby’s stake made up 9.8 percent of WEN’s market cap,” he wrote in a research note Tuesday. “Following the acquisition, the stake would make up 23.4 percent of WEN’s market cap. If Wendy’s were able to monetize its stake, then we estimate the net benefit (zero carrying value) would reduce the company’s enterprise value/EBITDA [over the next 12 months] to 12.5x from 13.7x.”
As long as BWW keeps the Bud Light icy cold and the mango habanero sauce the same, I’ll be a happy camper.