Private Equity News & Analysis

Roark buys Arby’s in $430m deal

The US mid-market firm has expanded its fast-food portfolio, which includes Auntie Anne's and Seattle's Best Coffee, with the addition of popular sandwich chain Arby's.

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Roark Capital Group has agreed to buy Arby's fast food chain from the Wendy’s/Arby’s Group. The Atlanta-based mid-market buyout firm will pay $130 million cash to Wendy’s/Arby’s, which will retain an 18.5 percent stock interest in the popular sandwich chain, according to a statement.

The deal, valued at $430 million, will generate an $80 million tax benefit for Wendy’s/Arby’s. Roark will assume $190 million in Arby’s related debt. The cash component of the deal will be derived from Roark’s $180 million investment in non-dividend paying preferred stock interest in Arby’s. Roark will invest up to $50 million more in the company through 2013 as needed.

Roark could not be reached for comment.

In 2008, Roark closed its second fund at $1 billion with investments from Princeton University, Harvard University, Hamilton Lane, Goldman Sachs, ATP, Parish Capital and Commonfund Capital.

The firm specialises in franchise and multi-unit buyouts in the restaurant, retail and service industries with growth prospects and revenue between  $20 million to $1 billion.

Arby’s is not Roark’s first foray into the food industry. The firm’s portfolio includes several food court staples including pretzel-maker Auntie Anne’s, Seattle’s Best Coffee, Moe’s Southwest Grill, McAlistar’s Deli, Carvel Ice Cream and Schlotzky’s sandwich chain.

Also on Monday, Roark announced it had agreed to buy Il Fornaio Corp, owner of the Il Fornaio restaurant chain as well as Corner Bakery Cafe. Terms of the deal were not reported.