Coffee and doughnut chain Tim Hortons will be entirely spun off by the end of this year, parent company Wendy's International said.
The initial public offering of 29 million Tim Hortons shares is expected to be priced between $21 and $23. The IPO, which is expected to be completed by late March, is projected to raise about $600 million.
After the IPO is complete, Wendy's (NYSE:WEN) will continue to own 84.65 per cent of Tim Hortons' outstanding shares, or 82.75 per cent if underwriters exercise their over-allotment option in full.
However, as part of a deal with several key investors announced late Thursday, Wendy's will spin off all of those remaining shares in Tim Hortons to shareholders no later than Dec. 31, 2006.
Wendy's also said that after the IPO it will consider ways to return excess cash to shareholders, including share repurchases or dividends.
The Wendy's chain of restaurants has been struggling, and investors have pushed the company to spinoff the money-making Tim Hortons chain to generate cash.
Wendy's bought Tim Hortons in 1995 in a deal worth $580 million.
Shares of Wendy's rose $2.10 US on Friday to finish at $60.54 US on the NYSE.