WENDY'S TO ACQUIRE MEXICAN GRILL CHAIN

Agrees to Buy Baja Fresh for $275 Million

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CHICAGO (AdAge.com) -- Wendy's International today said that it will acquire Fresh Enterprises, owner of the Baja Fresh Mexican Grill chain, for $275 million in cash.

Wendy's signed a definitive agreement with the fast-casual Mexican food chain after the market closed Thursday. It will finance the deal with cash and debt, with 80% of the proceeds going to three of Baja's main investors.

Already approved by the boards of both companies, the deal is expected to close in June, following regulatory approvals, making Baja a wholly-owned subsidiary.

Market leadership
The concept of fresh-made Mexican food "has proven itself for national growth potential," said Jack Schuessler, Wendy's chairman-CEO. The Thousand Oaks, Calif.-based Baja Fresh, which boasts market leadership in its segment with 29 consecutive quarters of same-store sales growth, has 169 units in 16 states.

The 12-year-old chain has grown to $177 million in systemwide sales, with 7.8% growth in 2001. Mr. Schuessler said the company "will move the needle for growth" and that it is a great fit into Wendy's long-term growth strategy.

"It has all of the elements that we identified in our long-term strategic growth plans," Mr. Schuessler said. "Most importantly, it has a clear quality position just like Wendy's. Customers love the food, which is prepared fresh on the premises daily."

Expansion planned
Wendy's expects to expand the chain to 600 to 700 units over the next five years, making up 4% to 6% of the company's 2003 revenues.

Over the next five years, Wendy's projects the Baja unit to contribute 13 cents to 15 cents to earnings per share. Wendy's long-term earnings growth outlook remains in the 12% to 15% range.

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