Shares of Buffalo Wild Wings gained more than 6.3% in morning trading Tuesday after the company announced that it was being acquired by Arby’s Restaurant Group. Arby’s will pay about $2.4 billion, or $157 per share, for the chicken wing chain.
“Buffalo Wild Wings is one of the most distinctive and successful entertainment and casual dining restaurant companies in America,” said Arby’s CEO Paul Brown in a statement. “We look forward to leveraging the combined strengths of both organizations into a truly differentiated and transformative multi-brand restaurant company.”
Roark Capital Group, a private equity firm that owns Arby’s, will finance the deal. Roark and Arby’s will also assume the debt of Buffalo Wild Wings.
At $157 per share, the deal values the home of “wings, beer, and sports” at a 7.2% premium to its Monday close. This buyout price is a 34% premium to BWLD’s close on Nov. 13, which was the last trading day before media reports that a buyout offer had been made started to emerge.
Buffalo Wild Wings has struggled recently, as industry-wide pressures and the rising price of chicken wings have put a damper on shares. These challenges brought criticism from investors, culminating in Mick McGuire's activist firm Marcato Capital Management encouraging long-time CEO Sally Smith’s departure this summer.
Still, Buffalo Wild Wings has worked to bolster foot traffic to its restaurants with new wing promotions, and management has touted its investments in delivery. Nevertheless, investors have been clamoring for a sale to a private equity firm, which is becoming a trend in today’s restaurant space.
Last month, casual dining chain Ruby Tuesday was purchased by NRD Capital for about $335 million. JAB Holdings, a Luxembourg-based firm, has taken U.S.-based chains Panera Bread and Krispy Kreme private over the past two years.
Once the deal closes, Buffalo Wild Wings will operate as an independent, privately held unit of Arby’s. Looking ahead, lower grocery prices and competition from fast-casual chains will continue present challenges for the company, so it will be important for management to successfully adapt.
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