MINNEAPOLIS — Buffalo Wild Wings, the Golden Valley, Minn.-based casual restaurant chain that for much of the last decade was one of the nation’s fastest-growing, is being purchased by an Atlanta investment firm that owns fast-food brands Arby’s and Jimmy John’s.
The $2.9 billion deal, announced before stock trading began Tuesday morning, represents the abrupt exit of an activist shareholder who in June won control of Buffalo Wild Wings in a proxy battle with company management.
The activist shareholder, Mick McGuire of San Francisco-based Marcato Capital, for months told the company’s shareholders he had a strategy to double or triple the company’s value by 2021 and was in it for the long term. But in less than six months, he sold the company at around the same price he paid to buy shares in it.
The company’s longtime leader, chief executive Sally Smith, announced her retirement when McGuire won control. And by early September, Buffalo Wild Wings shares had lost nearly one-third of their value as its direction foundered. The shares got a small boost in October when results for the fall quarter turned out better than expected and a large one two weeks ago when news emerged that McGuire was seeking a buyer.
Under the terms of the transaction, affiliates of Roark Capital Group will pay $157 a share for Buffalo Wild Wings, just a few dollars more than the $150 price that the company traded at on the day Marcato and McGuire won the proxy battle in June. Buffalo Wild Wings shares jumped around 6 percent to $156 in early trading Tuesday.
It wasn’t immediately clear whether Marcato made money on its investment and abortive attempt to remake Buffalo Wild Wings. McGuire wasn’t available for comment, a Marcato spokeswoman said.
Roark-owned Arby’s Restaurant Group Inc. will operate the approximately 1,200 Buffalo Wild Wings locations as an independent subsidiary.
Roark Capital has over the past decade purchased some of the nation’s largest and best-known restaurant chains. Its portfolio includes controlling stakes in Arby’s, Auntie Anne’s, Carl’s Jr., Cinnabon, Hardees, Jimmy John’s, Naf Naf Grill, Schlotzsky’s and Wingstop. It owns a minority stake in Wisconsin-based Culver’s.
“We are excited about this merger and confident Arby’s represents an excellent partner for Buffalo Wild Wings,” Smith, who has remained CEO while the company searched for a successor, said in a statement. “This transaction provides compelling value to our shareholders.”
Arby’s CEO, Paul Brown, added, “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.”
Arby’s, founded in 1964, is the second-largest sandwich restaurant brand in the world with more than 3,300 restaurants in seven countries.
Buffalo Wild Wings grew out of a wings restaurant that opened near the Ohio State University campus in Columbus in 1982. Within a few years, it added several locations around Ohio and the Midwest and Ken Dahlberg, the Twin Cities businessman who created the Miracle-Ear hearing aid, became its principal investor and owner. In 1991, he started to franchise the concept.