Wendy's, the fast-food restaurant known throughout California for its burgers and Frosty ice cream, is selling a majority of its ownership in Arby's through a stock sale. The transaction unwinds the $2.3 billion 2008 merger between the two fast food chains.

Arby's is also a fast food franchise located throughout the U.S. and in California. Arby's, primarily known for its roast beef sandwiches, has been struggling with sales during the recession. In 2010, Arby's sales fell 9.2 percent, whereas Wendy's sales dropped only 2.7 percent.

The Atlanta-based Roark Group is purchasing the majority stock interest in Arby's. According to the terms of the deal, Roark will pay Wendy's $130 million in cash in exchange for a majority stake in Wendy's. Roark will also assume approximately $190 million of Arby's debt.

Wendy's will retain an 18.5 percent ownership of Arby's in the deal, valued at $30 million, along with an estimated $80 million tax benefit that will be realized over the next few years. The total deal is valued at $430 million.

Roark owns 20 food franchises in 50 states, including California. It currently controls several other food franchises, including Carvel, Cinnabon and Seattle's Best Coffee.

With the purchase of the Arby's franchise, Roark will own 3,600 stores. Roark says it plans to invest $50 million into Arby's in order to bolster Arby's marketing and products. Roark is hoping that Arby's will increase sales and realize future growth through Roark's management and investment.

A major shareholder of Wendy's, who was instrumental in the deal, says that he believes this transaction will be beneficial to all of Wendy's shareholders. He hopes that by selling off its majority interest in Arby's, Wendy's will be able to devote its full attention and resources on improving sales at Wendy's.

Source: Forbes, "Wendy's to Sell Arby's In $430 Million Deal With Roark Capital," Heather Struck, June 13 2011