Market Overview

More Meats: Arby's To Merge With Buffalo Wild Wings

More Meats: Arby's To Merge With Buffalo Wild Wings

Struggling restaurant chain Buffalo Wild Wings (NASDAQ: BWLD) saw its stock dip below the $100 per share earlier this year, but was thrown a lifeline in the form of a takeout offer.

What You Need To Know

Roark Capital, a private equity investment firm that owns various restaurant chains including Auntie Anne's, CKE Restaurants, Moe's Southwest Grill, among others, offered to buy Buffalo Wild Wings for around $150 per share earlier in November. On Tuesday, Buffalo Wild Wings accepted a revised offer of $157 per share, which values the chicken wing chain just shy of $3 billion.

Buffalo Wild Wings will operate as a privately-held subsidiary of Arby's Restaurant Group and operate as an independent brand.

The price tag implies a premium of around 38 percent to Buffalo Wild Wings' 30-day volume-weighted average stock price as of November 13, the last trading day prior to Roark Capital's public approach.

Why It's Important

Buffalo Wild Wings' stock briefly traded above the $200 per share mark in 2015, but dropped amid competition, elevated chicken wing prices, and other factors. The restaurant chain has also come under pressure by activist investors and major shareholders to shakeup the company and bring in new directors.

The company had a turnaround plan on the table, including a menu change and focus on value. But under Roark Capital's umbrella the company may no longer face some of the pressures associated with being a public company.

What's Next?

Roark Capital intends to leverage the "combined strengths of both organizations [Arby's and Buffalo Wild Wings] into a truly differentiated and transformative multi-brand restaurant company."

Following the close of the transaction in the first quarter of 2018. Paul Brown, the current CEO of Arby's will serve as the CEO of the parent company.

Buffalo Wild Wing's stock was up about 6.6 percent at $156 Tuesday morning.

Related Links:

Buffalo Wild Wings Takeout Bid Limits Upside From Here; Deutsche Bank Downgrades Stock

Can Private Equity Interest Revitalize Buffalo Wild Wings?

Image credit: Mike Mozart, Flickr


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