's/Arby's Group looking at possible sale of its Arby's business

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's/Arby's Group looking at possible sale of its Arby's business

The Associated Press, On Thursday January 20, 2011, 2:46 pm EST

By The Associated Press

ATLANTA - 's/Arby's Group Inc. is considering selling its struggling Arby's

business and concentrating more on its better-performing 's hamburger

chain.

The Atlanta restaurant operator has seen softer sales at both its 's and

Arby's locations, but Arby's has struggled more because its sandwiches — which

can cost $5 or more — are more expensive than many other fast-food offerings.

Diners turned instead to cheaper alternatives during the economic downturn.

The company announced in November that it would be coming out with lower-priced

options at Arby's but now has decided to explore other options, including

potentially shedding the business. UBS Investment Bank will help 's/Arby's

as it explores alternatives for Arby's.

There are almost 3,700 Arby's restaurants in the chain, which is known best for

its roast beef sandwiches. 's has more than 6,500 restaurants in more than

20 countries.

Focusing on the 's brand, given its relative size, is the key to maximizing

shareholder's return, Peltz, the company's chairman, said in a statement

Thursday.

Peltz's Trian Fund Management investment firm owns about one-fourth of

's/Arby's stock.

The overall company has been the subject of takeover speculation as well.

's/Arby's said it received a third-party in June about acquiring the

fast-food company. In November, management pushed for Trian to act quickly on

the inquiry.

Morningstar analyst Joscelyn MacKay said selling Arby's could make 's

itself a more tempting target for a leveraged buyout.

If that doesn't happen, getting rid of Arby's to focus on the more profitable

's business appears to be a good move, MacKay said in a research note.

Arby's has been a drag on the company's results since the two companies combined

in 2008.

It's similar to the announcement by Yum Brands just two days ago that it was

looking to sell its Long Silver's and A & W chains in order to focus on its

more successful Taco Bell, KFC, and Pizza Hut brands.

's/Arby's lost money in its third quarter, hurt by higher ingredient costs

and weakness at 's and Arby's locations. The company plans to report

preliminary fourth-quarter and full-year results on after the market closes on

Jan. 26.

The announcement sent shares up in trading Thursday. Shares rose 39 cents, or

8.5 per cent, to $4.85 in afternoon trading.