A Merger Deal

Student’s Name: Mohammed Al Sheikh

Student Number: 200611015

Instructor: Mr. Bryan Parachoniak

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Table of Contents:

Introduction:

• Report introduction.

• Mergers and their results in general.

• Reasons of mergers.

Main Body:

• Wendy’s Company.

• Arby’s Company.

• Wendy’s & Arby’s Group.

• Statistical information about the merger.

• Pros and Cons of the deal (SWOT analysis).

o Who benefited from this merger?

o How the merger was beneficial?

• Business Ethics.

Conclusion.

Vocabulary list.

Bibliography.

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Introduction:

• The report intro:

In this report, I will be discussing a new merger that happened between

two companies that are working the in the same industry which is fast food

restaurants. This merger is between Wendy’s and Arby’s restaurants. Also, will

describe the new merger and conduct a SWOT analysis on the new group.

Finally, I will be discussing the unethical business issues that may arise

because of this merger.

• Mergers and their results in General:

A merger is a business action that occurs when two separate companies

join forces to become one larger company. It is similar to a takeover and an

acquisition but the main different is that the two companies shareholders

have even shares, so no company is more powerful than the other. Usually,

mergers are not announced in the media because the merger deal is often for

the shareholders interest but not for the other stakeholders. I believe that in

every merger, there are some positive and negative such as the company has

more resources to accomplish their work while they are conducting

unethical business issues that are uncontrollable.

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• Reasons of mergers.

There are several reasons why most companies merged together, and all

these reasons differ from a situation to another. Some of the most important

reasons are:

1. The merger is for the interest of the shareholders.

2. Having more resources to conduct businesses.

3. Having more funds and cash to enhance the money liquidity.

4. A common good that will be achieved by the shareholders.

5. There are more reasons such as: conquering the market,

controlling the supply of the goods and the prices and reducing

competition.

• Wendy’s Company:

Wendy’s is an international chain of restaurants that serve fast food

products. It has more than 6100 locations and it comes third in terms of

capacity after McDonalds and Burger King. Moreover, Wendy’s is a

publicly traded company that has 70% of its restaurant franchised. The

main products that Wendy’s has are fast food products including

hamburgers, chicken products, salads, French fries and different kinds of

ice cream. One of interesting issues that Wendy’s faced is a huge boycott

started by the lesbian and gays communities as a result of Wendy’s taking

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 their ads from the talk show Elian when people knew that she is lesbian.

There are more than 20 countries around the world, which are

considered as former locations for Wendy’s. I believe that this issue of start

operating in a country then closing down is considered as a huge failure,

specially that we are mentioning approximately 20 countries out of 42.

• Arby’s Company:

Arby’s is a fast food restaurant that was founded in 1964 (five years before

Wendy’s). There are 3600 locations in different spots in North America

(Canada and the US), approximately 1700 of these branches are owned by

franchised and the rest is company-owned. The main product that Arby’s

produce is Roast beef and other kind of sandwiches that is delicious and rich

with flavors. Also, they produce the similar products to the ones that Wendy’s

produce such as salads, French fries, desserts and other side orders.

The company has a mascot that is probably known by everyone, which is

the cowboy hat. It is represented in all kind of commercials either television

commercials or printed ones.

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 • Wendy’s & Arby’s Group:

In the past there were two companies, Wendy’s Company and Triarc

Company. Triarc has joined with Wendy’s to form a new group, which is

Wendy’s, & Arby’s Group Inc. This group is a holding company that has a

single stock that trades in the New York Stock Exchange (symbol=WEN).

After this merger, WEN is considered the third largest quick serves restaurant.

To explain this merger in term of financial stock data, I would like to quote

the following: “The merger was an all-stock transaction in which Wendy's

shareholders received 4.25 shares of Triarc Class A common stock for each

share of Wendy's common stock they owned, Triarc changed its name to

Wendy’s/Arby’s Group, Inc., and existing shares of Triarc Class B common

stock were converted into Wendy's/Arby's Group, Inc.’s common stock on a

one-for-one basis. As a result, Wendy’s is now a wholly-owned operating

subsidiary of Wendy’s/Arby’s Group, Inc.” (corpgov.wendysarbys.com, 2008)

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 • Statistical information about the merger:

The table below shows some statistics that demonstrates the difference

between Wendy’s and Arby’s. This information was before the merger

between those two companies.

Wendy’s Arby’s
Market Capital $60.07 Billion
Revenue $1.25 Billion $1.2637 Billion
Net Profit $37.0 Million $16.1 Million
Number of employees 44,000 employees 25,000 employees
Number of Locations Approximately Approximately 3,600

locations
This simple statistic shows that the difference between those two

companies while they were separated, and this gives us a great idea about

what will happen after joining forces. First, I believe that the weaker

company will take down the larger company if the administration did not

repair their mistakes and fix their problems. The weaker company will use

resources in a useless way so they will be wasting resources specially that

we are in a time that resources are so scarce.

On the other hand, if the larger company will try to put pressure to

double the effort for the weaker company, the larger company will loss a bit

of the share value because of this merger and their strategy to rise the

weaker company. In this case I believe that Arby’s is the larger company

and Wendy’s is the weaker one.

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• Pros and Cons of the deal (SWOT analysis):

In this section I will develop an analysis that determine the strength,

weaknesses, opportunities, and threats that this merger has. First, I will

discuss the part of the analysis, which describes the internal issues in an

organization.

1. Strengths:

a. Have more resource and more funds that will increase

cash flow.

b. Information exchange will also be one of the strengths of

this merger; cause-exchanging information will give a

great strength especially in terms of innovation.

2. Weaknesses:

a. Having difficulty controlling the group cause number of

the employees has been doubled.

b. The merger between Wendy’s and Arby’s will face some

difficulties in sustaining the same stock value. Because

resources will be segmented between these two

companies.

Then I will discuss the part of the analysis that describes the

environmental factors that effect an organization.

1. Opportunities:

a. Having larger market capital that will indeed enlarge the

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 target market of the company.

b. Enlarging the size of the company in which it will be one

of the major competitors in the quick restaurant industries.

c. Increasing the opportunity of having more brand names,

increasing growth and profitability,

2. Threats:

a. One of the most important threats is losing the power of

the company by wasting resources by mismanaging it

efficiently.

b. Also, not having the potential to compete with the other

competitors such as McDonalds and Burger King. This is

a result for misleading the merger from being successful.

• Business Ethics:

Business ethics is all about right or wrong actions taken by managers or

leaders within an organization. Also, it can be the right or wrong actions

that the company does to environment or any other external factor. I believe

that every merger has an unethical behavior either toward its employees,

customers, local community or the society itself. Each organization has

liabilities toward its stakeholders, but the serious question is: are they acting

ethically toward the stakeholders? I believe the answer is no.

In this merger, there are several unethical behaviors, but I will be

focusing on the most important two in my own perspective. First, obesity is

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 one of the most unethical business behavior that face all fast food

restaurants specially this merger because it is joining forces to increase the

number of restaurants to increase growth, while they are increasing the

number of people who are dieing from obesity.

Many people have not been knowledgeable enough to take actions

against obesity, so I must say that this is one of the responsibilities of

Wendy’s and Arby’s Group inc., to fight obesity by these steps:

a. Introducing new natural food that is healthy and organic.

b. Opening a new brand of restaurant that only serves healthy food.

c. Providing a free program to help people control their weight.

d. Using best kinds of oil for cooking burgers and make sure its

replaceable everyday instead of using the same oil for cooking

more than a day.

The second unethical issue is the number of employees losing benefits

because of this merger. Since the merger is putting a huge number of people

into new positions and restructuring their job titles, so many benefits will

mix up eventually. I believe that this is due to the bad management

decisions that managers take. These quick decisions can be restudied to

make sure that the merger does not happen unless all employees have their

benefits equally.

Conclusion:

In conclusion, I believe that every merger has its own advantages and

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disadvantages. Mostly, disadvantages appear to people in the beginning

specially that the merged companies are not well organized. But until the

organization become more organized and well structured, it will start to sustain

a better position in the market. Also, all companies have unethical behavior

either toward environment, employees or other external factor. Wendy’s &

Arby’s group are conducting unethical behavior toward their community where

they help increase obesity instead of fighting it. On the other hand, they are

losing their employees trust and loyalty since they do not give them equal

benefits.

Vocabulary List:

Word Definition
Crucial Critical, esp. in the success or failure of something.
Subsidiary Less important than but related or supplementary to.
Ingredients Any of the foods or substances that are combined to

make a particular dish.

Prototype A first or preliminary model of something.
Initiated Cause (a process or action) to begin.
Protege A person who is guided and supported by an older and

more experienced or influential person.

Bulk The mass or magnitude of something large.

Bibliography:

What is a Merger, wisegeek.com, retrieved on 22ndDecember, 2008 from:

http://www.wisegeek.com/what-is-a-merger.htm

Merger, investopedia.com, retrieved on 22ndDecember, 2008 from:

http://www.investopedia.com/terms/m/merger.asp?viewed=1

Wendy’s & Arby’s Group, wendysarbys.com, retrieved on 22nd December,

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 2008 from:

http://corpgov.wendysarbys.com/phoenix.zhtml?c=67548&p=irol- aboutusfaq

Arby’s restaurant, wendysarbys.com, retrieved on

22ndDecember, 2008 from: http://www.wendysarbys.com/about/our-

brands/arbysrestaurant

Wendy's, Arby's Join Forces, adweek.com, retrieved on 22nd December 2008

from:

http://www.adweek.com/aw/content_display/news/client/e3ife062702f4b566e2cd2b2

1ef5cd44523

What Happens to Employee Benefits After a Merger, Vault.com, retrieved on

22ndDecember, 2008 from: http://www.vault.com/nr/newsmain.jsp?

nr_page=3&ch_id=401&article_id=52129&cat_id=1089

When Merger Happens, learn.geekinterview.com, retrieved on 22nd December

2008 from: http://www.learn.geekinterview.com/career/workplace/when-merger-

happens.html

Wendy’s, wikipedia.com, retrieved on 21st December 2008 from:

http://en.wikipedia.org/wiki/Wendy%27s

Arby’s, wikipedia.com, retrieved on 21st December 2008 from:

http://en.wikipedia.org/wiki/Arby%27s

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