Fast-food chain Arby’s Restaurant Group has secured an agreement to purchase Buffalo Wild Wings (NASDAQ:BWLD) for $2.4 billion in cash. Under the terms of the agreement, Arby’s will pay $157 per share in Buffalo Wild Wings stock. The amount is a 7 percent premium over its Monday closing price of $146.40. The companies value the transaction at $2.9 billion when debt is included.
Arby’s private equity owner Roark Capital Group is backing the deal. Roark Capital Group also has investments in Hardee’s, Jimmy John’s, and other chains. The deal still needs the approval of Buffalo Wild Wings shareholders. The deal is expected to close during the first few months of next year.
Arby’s said Buffalo Wild Wings would continue operating as an independent brand. Arby’s CEO Paul Brown said in a statement, “Buffalo Wild Wings is one of the most distinctive and successful entertainment and casual dining restaurant companies in America. We are excited to welcome a brand with such a rich heritage, led by an exceptionally talented team.”
Buffalo Wild Wings, known to many fans as BDubs, uses the slogan “wings, beer, sports” in its advertisements, showcasing the three things the chain does best. The Minneapolis-based chain has more than 1,250 locations in 10 countries. Shares of Buffalo Wild Wings jumped 6.4 percent after the deal was made public.
Low grocery prices and new food delivery options have struck at the heart of the casual dining sector, already struggling with the rapid rise of their fast-casual competitors. In the most recent quarter, Buffalo Wild Wings reported a 2.3 percent sales drop at its established restaurants. The chain recently bolstered foot traffic with a half-price deal on wings.
The last year has been a trying one for Buffalo Wild Wings’ executive team. Activist investor Mick McGuire’s Marcato Capital Management has been pushing strongly for major modifications to the chain’s business strategy. The fight eventually led to the retirement of the restaurant chain’s longtime CEO, Sally Smith.
Buffalo Wild Wings is one of several restaurant chains purchased by private equity groups this year. Panera Bread was also taken private, bought in July by JAB Holding Co. for more than $7 billion. Ruby Tuesday Inc. agreed to be sold to private-equity firm NRD Capital for $146 million last month.