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Apr-19-2008Wendy's Rejects 2 Offers(topic overview)
CONTENTS:
- The fate of hamburger chain Wendy's International continues to hang in the air after directors there rejected two acquisition offers from entities tied to investor Nelson Peltz. (More...)
- Wendy's declined to comment on Friday. (More...)
- The filing also said a special committee formed a year ago to consider options for Wendy's future, including a possible sale, will have further announcements "in the very near future." (More...)
- In the first quarter, sales at U.S. company stores opened at least a year, a key indicator of success, fell 1.6 percent and 0.1 percent for franchise stores. (More...)
- One proposal called for combining Wendy's and Triarc's Arby's sandwich chain. (More...)
- The San Antonio-based company said in a regulatory filing that it plans to take a $374 million first-quarter pretax charge against earnings because of the job cuts. (More...)
- Trian, combined with affiliated funds, has a nearly 10 percent stake in Wendy's. (More...)
- Peltz's Triarc Cos. owns Arby's, which has more than 3,000 restaurants. (More...)
- The company's shares gained 50 cents, or 454.55 per cent, to close at 61 cents on more than 17.2 million shares traded on the TSX Venture Exchange. (More...)
- Jon Ogg is a producer and editor of the Special Situation newsletter and the "10 Stocks Under $10" weekly newsletter for 247Wallst.com. (More...)
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The fate of hamburger chain Wendy's International continues to hang in the air after directors there rejected two acquisition offers from entities tied to investor Nelson Peltz. Wendy's directors this week turned down an offer from Mr. Peltz's hedge fund, Trian Fund Management, and Triarc Cos., parent of the Arby's chain, to combine Wendy's and Arby's, as well as another offer from them to buy Wendy's for more than $900 million in cash and stock, according to a regulatory filing made Friday. The tight credit markets have led investors to believe that it's unlikely, though still possible, Wendy's will be. [1] The fate of Wendy's International Inc. continues to hang in the air after directors rejected two acquisition offers from entities tied to investor Nelson Peltz. Wendy's board Thursday turned down an offer from Mr. Peltz's hedge fund, Trian Fund Management LP, and Triarc Cos., parent of the Arby's chain, to combine Wendy's and Arby's, as well as another offer from them to buy Wendy's for more than $900 million in cash and stock. The move was disclosed in a letter sent by Peter May, a top official with both entities,.[2]
The first proposal announced by Trian called for the combination of Wendy's and Arby's while the second involved an acquisition of 100% of the fast food chain for $900 million in cash with the balance in stock. Wendy's rejected these proposals in record time and now intends to pursue a transaction with another party, such as the sale of a minority equity interest. Trian now intends to take its battle directly to shareholders by demanding a special meeting to vote on the two takeover proposals. The activist hedge fund believes that the board of directors acted against the will of shareholders by putting their own interests ahead of the shareholders'. The company has yet to comment on whether or not this meeting will take place. Wendy's fired back with its own letter today blasting Trian for distributing misleading statements.[3] A few months later, Trian I Acquisition Corp. (AMEX:TUX), a special-purpose acquisition company, went public with Peltz as chairman and May as vice-chairman. Pickett claimed in his letter that the buyout proposals involved the resources of the new public company in addition to Triarc and Trian Fund Management, and the exclusion of the new company's role in the bids painted a "very misleading picture" for its shareholders. "If the special committee now intends to pursue a transaction with another party, such as the sale of a minority equity interest, we urge the board to ensure that any alternative transaction be subject to the approval of Wendy's shareholders and not just the members of the special committee," May wrote.[4] Trian, run by activist investor Nelson Peltz, also said that it sent a letter to Wendy's on April 18, in which it stated that it was 'very concerned' about the current direction of Wendy's and added that it intends to contact Wendy's shareholders directly to hold a special meeting on the Wendy's future. In a filing with the Securities and Exchange Commission on Friday, Trian said that it and Triarc Cos Inc were informed on Thursday that a special committee of Wendy's board of directors has rejected the acquisition proposals made by them to Wendy's.[5] Trian said it was informed on Thursday that a special committee of Wendy's board had rejected two acquisition proposals made by Trian and Peltz's Triarc Companies Inc. (NYSE:TRY) Trian said it intends to contact fellow shareholders for the purpose of calling a special meeting of the shareholders of the company, at which all shareholders will have the opportunity to vote on the future direction of Wendy's.[6]
After weeks of silence, Wendy's International and interests led by billionaire Nelson Peltz sniped back and forth yesterday over the future of the Dublin-based burger chain. The Peltz camp said two recent offers to buy the company were rejected, and it is seeking a special meeting so that shareholders can vote on the company's future, its filing with the Securities and Exchange Commission said. Soon after, Wendy's shot back with its own filing, saying "private actions and public statements have been inconsistent" on the part of Trian Fund Management and Triarc Cos., the Peltz-controlled companies that made the bids.[7] Trian Fund Management LP, an affiliate of New York -based buyout suitor Triarc Companies Inc., in a Securities and Exchange Commission filing Friday disclosed that it had proposed the combination of Wendy's with Triarc's Arby's fast-food chain and also offered to acquire the company outright in a cash-and-stock deal. They were rejected within 24 hours, Trian President Peter W. May wrote to Wendy's Chairman James V. Pickett. "As a large shareholder of Wendy's, Trian is very concerned about the current direction of Wendy's," he wrote, adding that the firm intends to contact fellow shareholders to convene a meeting to "vote on the future direction of Wendy's." Pickett, in a letter made available through a regulatory filing later Friday, said the rejections of the proposals were "attributable to their inadequacy."[4] The activist with just under 10 percent of shares has pressed for better financial performance from the No. 3 hamburger chain, which is losing ground to McDonald's Corp (MCD.N: Quote, Profile, Research ) and Burger King Holdings Inc (BKC.N: Quote, Profile, Research ). Peltz's Triarc Cos Inc (TRY.N: Quote, Profile, Research ) and Trian Fund Management on Friday said they proposed combining Wendy's and Arby's, a sandwich chain owned by Triarc. They also offered to buy 100 percent of Wendy's "for over $900 million in cash with the balance in stock," Peter May, an executive at both Triarc and Trian, said in a letter addressed to Wendy's Chairman James Pickett and included in a regulatory filing on Friday.[8] Trian and its Triarc Cos. affiliate proposed to combine the Arby's restaurant chain with Wendy's, and separately offered to buy the company for $900 million in cash and the balance in stock, Trian President Peter May said in a letter to Wendy's Chairman James Pickett that was part of a regulatory filing. The bids were rejected because of their "inadequacy," Pickett said in a separate response.[9]
They also offered to buy 100 per cent of Wendy's "for over $900 million in cash, with the balance in stock," Peter May, an executive at both Triarc and Trian, said in a letter addressed to Wendy's chairman James Pickett and included in a regulatory filing Friday.[10] The other involved buying 100 per cent of Wendy's "for over $900 million (U.S.) in cash with the balance in stock," Trian and Triarc said in a letter addressed to Wendy's chair James Pickett. In the letter, which was included with a regulatory filing yesterday, the suitors said their proposals would have required the approval of the shareholders on each side of the transaction and that neither was conditional on the receipt of third-party financing.[11] One of Trian's proposals called for a combination of Wendy's and Arby's, while the other involved an acquisition of 100% of Wendy's for over $900 million in cash with the balance in stock. In his letter addressed to James Pickett, the chairman of the board of Wendy's, and filed with the SEC, Trian's president Peter May said, 'Our proposals would have required the approval of the shareholders on each side of the transaction and neither of the proposals was conditioned on the receipt of third party financing.[5] In a letter to Wendy's board chairman James Pickett, Peter May, president of Trian and vice chairman of Triarc, said Trian and Triarc learned Thursday that the special committee rejected two offers: One a combination of Arby's and Wendy's and the other a cash offer of more than $900 million plus stock.[12]
In a filing with the SEC, Trian stated that a special committee of Wendy's board of directors rejected two acquisition proposals made by Trian and Triarc, the operator of the Arby's fast-food chain. The suitors said in a letter that they were "very concerned" about the direction of the company. The SEC filing stated that Triarc is considering its alternatives with respect to Wendy's. Earlier this year, Trian proposed an overhaul of Wendy's board of directors.[13] The financier Nelson Peltz, who runs the activist hedge fund Trian Partners, doesn't see the charm in the square hamburger served by the girl with red ponytails. Trian owns nearly 10 percent of the outstanding shares of the fast food chain Wendy's and, judging by its latest letter to the company's management, Peltz is not happy with the direction the burger chain is heading. He's also not taking rejection too well. According to the letter, a special committee formed by Wendy's to explore its strategic options rejected two different acquisition proposals by Trian in the last 24 hours.[14] Wendy's International (NYSE: WEN) shares are up sharply this week after the company disclosed an activist investor unveiled two takeover proposals. Unfortunately, both were rejected by the fast food chain despite hefty premiums to the going market price. Nelson Peltz's Trian Fund Management has not stopped fighting, however, as the company progresses with its review of strategic alternatives.[3] Nelson Peltz's Trian Fund Management LP said Friday that Wendy's International Inc., the hamburger chain that put itself up for sale last year, has rejected two acquisition bids from the investment firm.[9]
LOS ANGELES'''Nelson Peltz's Trian Partners says it will seek a special meeting of Wendy's International Inc. shareholders because the hamburger chain has rejected two separate takeover offers from Trian and the billionaire investor's Triarc Cos. Inc.[11] Retail consumer prices rose 8.3 percent in March, a slight decline from February's 8.7 percent, the highest rate in nearly 12 years. That was driven by a 21 percent rise in food costs, including a 66.7 percent increase for pork, the country's staple meat. Wendy's buyout move Billionaire investor seeks shareholder meeting A key shareholder of Wendy's International Inc. says the third-largest hamburger chain has rejected two offers to buy the chain and that he wants a special shareholder meeting to discuss the company's future.[15] COLUMBUS, Ohio -- A key shareholder of Wendy's International Inc. says the third-largest hamburger chain has rejected two offers to be purchased, prompting his firm to seek a special shareholder meeting to discuss the company's future.[16]
Associated Press - April 18, 2008 10:35 AM ET COLUMBUS, Ohio (AP) - A key shareholder of Wendy's International Inc. says the third-largest hamburger chain has rejected two offers to buy the[17]
LOS ANGELES (Reuters) - Wendy's International Inc (WEN.N: Quote, Profile, Research ) rejected a cash and stock takeover bid and an offer to combine with Arby's, billionaire Nelson Peltz's businesses said on Friday as the hamburger chain argued both offers were low.[8] LOS ANGELES (Reuters) - Wendy's International Inc (WEN.N: Quote, Profile, Research ) on Friday accused entities controlled by billionaire investor Nelson Peltz of releasing misleading information regarding offers they made to buy the hamburger chain.[18]
Billionaire investor Nelson Peltz's Trian Partners said in a regulatory filing that it is concerned about Wendy's future. In its own regulatory filing, Wendy's said it rejected both offers because they were inadequate and that Trian has been misleading investors. It also said a board committee expects to make further announcements about its review soon. It did not say when.[19] Billionaire investor Nelson Peltz's Trian Partners said Friday in a regulatory filing that it is concerned about Wendy's (nyse: WEN - news - people ) future. Wendy's board formed a committee a year ago to determine how to increase its stock price.[20]
Nelson Peltz's Trian Partners says today in a filing with the Securities and Exchange Commission that it is concerned about future of Wendy's, which is based in the Columbus suburb of Dublin. Wendy's board formed a committee a year ago to determine how to increase its stock price.[17] Billionaire investor Nelson Peltz's Trian Partners said in a filing with the Securities and Exchange Commission that it is concerned about the future of Wendy's. Through Trian and with his allies, Peltz controls 9.8 percent of Wendy's stock.[21]
One option could include a possible sale. In its own regulatory filing yesterday, Wendy's said it rejected both offers because they were inadequate and that Trian has been misleading investors. It also said the committee expects to make further announcements about its review soon. It did not say when. Peltz controls 9.8 per cent of Wendy's stock through Trian and with his allies, according to the U.S. Securities and Exchange Commission filing.[16]
NEW YORK -- Shareholder Trian Partners LP said Friday that Wendy's International Inc. rejected two offers it made to buy the company, according to a regulatory filing.[22]
Triarc further groused, "Our most recent proposals were summarily rejected in less than 24 hours." Although the most recent proposals may indeed have been dismissed that quickly, this courtship has been going on for months; Trian started talking to Wendy's last year, and they had an offer on the table as far back as November. It bears mentioning that he longer this fight goes, the shakier the ground Wendy's stands on. Wendy's stock's year-long high was $42.22; earlier this week, when news broke that Peltz wanted greater control of the company's board, the stock was trading at its 52-week low of $22.18. Operationally, it's not doing much better, either.[23] One proposal called for the combination of Wendy's and Arby's, while the other offered to buy Wendy's for more than $900 million in cash and stock. In February, Trian, run by activist investor Nelson Peltz, proposed to overhaul Wendy's board in a move that would give him effective control of the company.[22] The fourth quarter of 2006 also saw the company approving the prospective sale of Cafe Express. The company noted the move as a positive step in its continuing efforts at further enhancing value for its shareholders, franchisees and other shareholders. Wendy's was then challenged with calls for a change by billionaire investor Nelson Peltz who got three seats on an expanded Wendy's board as he pushed for value-enhancing actions.[5]
Among other things, Wendy's Chairman James Pickett said Peltz's Trian Fund Management and Triarc Cos Inc (TRY.N: Quote, Profile, Research ) had misled investors by failing to reveal how the proposed acquisition would value Wendy's. "We believe that is very misleading to our shareholders unless they also know that the value you ascribed to Wendy's in such proposal was significantly below a level we had previously told you very clearly would be unacceptable," Pickett said in a letter addressed to Trian President Peter May and filed with U.S. securities regulators.[18] In addition to your capacities as President of Trian Fund Management, L.P. ("Trian") and Vice Chairman of Triarc Companies, Inc. ("Triarc"), it is my assumption that you were also writing in your capacity as Vice Chairman of Trian I Acquisition Corp., a recently formed special purpose acquisition company (the "SPAC"). That is because the proposals you have made, as cited in your letter, variously involve the resources of all these entities, and not disclosing the role of the SPAC leaves our shareholders with a very misleading picture, in my view.[24]
In a letter to James Pickett, chairman of Wendy's board, the Peltz side indicated it is concerned that Wendy's might strike a deal with a different bidder without allowing shareholders to vote. "If the special committee now intends to pursue a transaction with another party ''' we urge the board to ensure that any alternative transaction be subject to the approval of Wendy's shareholders," wrote Peter May, a top officer with both Trian and Triarc.[7] "We urge the board to ensure that any alternative transaction be subject to the approval of Wendy's shareholders and not just the members of the special committee," Trian President Peter May wrote in a letter sent to Wendy's Chairman James Pickett and filed with the Securities and Exchange Commission.[22]
Our most recent proposals were summarily rejected in less than 24 hours. If the special committee now intends to pursue a transaction with another party, such as the sale of a minority equity interest, we urge the board to ensure that any alternative transaction be subject to the approval of Wendy's shareholders and not just the members of the special committee. If shareholders approve a different transaction after having been afforded the opportunity to consider the benefits of the transactions we had proposed, Trian will abide by the will of its fellow shareholders.[24] "Our most recent proposals were summarily rejected in less than 24 hours," the companies wrote. The suitors also said they want any transaction entered into by Wendy's to be approved by all shareholders, and not just the special committee of the board of directors that rejected the Trian/Triarc takeover proposals.[11]
Trian said that any alternative transaction entered into by Wendy's should be subject to the approval of the company's shareholders and not just the special committee of the board of directors.[5] Trian said it intends to contact fellow shareholders for the purpose of calling a special meeting of Wendy's shareholders, at which all shareholders will have the opportunity to vote on the future direction of Wendy's. Atlanta, Georgia-based Triarc, the franchisor of the Arby's restaurant system, said it was considering its alternatives with respect to Wendy's and intends to contact and discuss with other shareholders of Wendy's their respective views regarding their investment in Wendy's, the conduct of the special committee and possible strategies to maximize shareholder value. According to Triarc, such strategies should include shareholder participation in a bid by it to acquire Wendy's.[5] Trian wants shareholders to determine the future of Wendy's and it intends to contact other shareholders to call a special meeting to give shareholders the opportunity to vote on the future direction of Wendy's. This is looking like it is a very unique special situation.[25]
We therefore intend to contact our fellow shareholders for the purpose of calling a special meeting of shareholders at which all shareholders will have the opportunity to vote on the future direction of Wendy's.[24]
Activist investor Nelson Peltz's Trian called for a special meeting of shareholders to vote on the direction of the hamburger chain. It said it is "very concerned" about the current direction.[22] The activist with just under 10 per cent of shares has pressed for better financial performance from the No. 3 hamburger chain, which is losing ground to McDonald's Corp and Burger King Holdings Inc. Peltz's Triarc Cos. Inc. and Trian Fund Management said they proposed combining Wendy's and Arby's, a sandwich chain owned by Triarc.[10] Subsequently, in a filing with the SEC in November 2007, Wendy's revealed a proposal from Triarc Companies, Inc. and Trian Fund Management, L.P to purchase 100% of Wendy's equity. Wendy's indicated the price by Triarc was below the valuation range of $37-$41 per share, or a total of $3.2 billion-$3.6 billion offered by Triarc in its initial indicative offer on July 30, 2007. Triarc later stated it might be prepared to increase its valuation depending on the results of its due diligence.[5]
So have Triarc's, which makes the unspecified amount of stock included in the acquisition offer even harder for Wendy's shareholders to swallow. Its shares trade for $6.77, down from their 52-week high of $19.74.[14] The other offer proposed an acquisition of Wendy's outright for "over $900 million in cash with the balance in stock." Exactly how much is the balance in the offer? And what stock? The identity of the buyer wasn't entirely clear from the letter, but it's safe to assume it was Triarc, which is publicly traded.[14]
Peter May, president of Trian and vice-chairperson of Triac, said the firms learned Thursday the special committee rejected two offers, one a combination of Arby's and Wendy's and the other a cash offer of more than US$900 million plus stock.[16] Wendy's is not biting. Peltz revealed today that Wendy's special committee which is evaluating strategic alternatives for the company has apparently rejected not one, but two of his acquisition proposals: one that hoped to combine Wendy's with Arby's, and one in which Trian proposed to buy Wendy's.[23] Trian was informed that a special committee of Wendy's board had rejected two acquisition proposals made by Trian and Triarc Cos. (TRYB).[26]
According to the letter, Wendy's (WEN) rejected two acquisition proposals made by Trian and Triarc Co., which owns fast-food chain Arby's.[22]
Pickett said Jan. 28 that the strategic review "is in the final stages.'' Turmoil in the financial markets, resulting in tightening credit, delayed the sale process, he said. In his letter today, Pickett questioned the value of the proposal to combine Wendy's and Arby's. "The value you ascribed to Wendy's in such a proposal was significantly below a level we had previously told you very clearly would be unacceptable,'' Pickett wrote. The second proposal, to acquire Wendy's for cash and stock, may mean that "outright acquisition is unlikely given the current financing environment,'' John Glass, an analyst with Morgan Stanley, said in a note today to clients. "We can understand why a stock deal from such a small company would be viewed as inherently unattractive, as it is essentially Wendy's buying itself.''[27] One proposal called for the combination of Wendy's and Arby's while the other involved an acquisition of 100% of Wendy's for over $900 million in cash with the balance in stock.[24] Yesterday's filing said Peltz-controlled companies were willing to pay $900 million in cash and additional stock for Wendy's in one bid, or merge Wendy's with Arby's, which is owned by one of Peltz's companies.[7] Now Wendy's current market capitalization is $2.2 billion, and Peltz is offering $900 million in cash and an unspecified amount in stock; some reports put the value of the deal at around $27 a share.[23]
Wendy's market capitalization is currently $2.2 billion. Add in the company's $570 million debt and subtract its $211 million in cash, and you arrive at an enterprise value of $2.5 billion. Even taking into consideration Peltz's 10 percent ownership, it's hard to conclude that a $900 million offer is worth taking.[14]
Wendy's blamed the fall on harsh weather and a slow Easter holiday season, which sounds unconvincing considering the chain's lack of new products, the management distraction of sale talks with Trian, and other factors that could have also influenced the results. Peltz's concessions have been few, but he has made some. By lowering the offer for Wendy's, he has apparently made financing less of a problem in the new bid, ending bickering about the stapled financing involved in previous bids. Wendy's should consider whether its avoidance of a deal may actually be giving the company and its investors a bad case of indigestion.[23] The chain has declined 22 percent since deciding to consider a sale, while McDonald's has climbed 20 percent. "From a shareholder perspective, they're better off if Peltz goes away and let's them get on with running the business," said Malcolm Knapp, a New York-based restaurant consultant. Peltz has distracted Wendy's management from turning around the business while alienating franchisees, he said. "Wendy's franchisees do not want anything to do with Peltz, and they view Arby's as a competitor," Knapp said. "Peltz is going to do his thing and try to win, but there is not a lot of sentiment on his side."[9]
"Trian is very concerned about the current direction of Wendy's,'' May said in the letter. If the chain decides to consider an alternative to a sale, such as a sale of a minority stake, May urged that shareholders be allowed to vote on an agreement rather than leave it in the hands of the committee.[27] Trian, which controls a 9.8 percent stake in Wendy's, plans to contact shareholders to call a meeting on the direction of the company after the board rejected the firms' proposals, May wrote in the letter.[9] A letter to Wendy's chairperson James Pickett said "As a large shareholder of Wendy's, Trian is very concerned about the current direction of Wendy's." OTTAWA -- Shares of PharmaGap Inc., an Ottawa-based drug developer, lost some of their shine yesterday after they skyrocketed Thursday over encouraging results from some cancer drug tests. The company released results of animal studies it said indicate statistically significant effectiveness of its lead cancer drug in treating human breast and colon cancer.[16] Pickett said Trian and Triarc failed to reveal how the proposed deals would value Wendy's. "We believe that is very misleading to our shareholders unless they also know that the value you ascribed to Wendy's in such proposal was significantly below a level we had previously told you very clearly would be unacceptable," he said in a letter addressed to May and filed with U.S. securities regulators.[10]
Wendy's also pointed out that the fact that the deals were not contingent on third party financial was misleading because it is in fact contingent on a new Special Purpose Acquisition Company (SPAC) formed to consummate the transaction. This SPAC was not disclosed by Trian in any of their communications, and any consummation of the transaction must have the approval of the SPAC's shareholders.[3] Trian also said that in the event shareholders approved a different transaction after having been afforded the opportunity to consider the benefits of the transaction that it proposed, it would abide by the will of the shareholders. Noting that Wendy's plans to announce its financial results for the first quarter on April 25, Trian said it expects the company will take any action prior to the announcement of its financial results.[5] Before any transaction is considered, shareholders should be fully updated on the current financial condition of the company--including sales, profits and margins. The Company has publicly stated that it plans to announce first quarter results on April 25 and we expect the Company will not take any action prior to this announcement. It is now time for Wendy's shareholders to decide the future of their company.[24] Wendy's said April 3 that sales at stores open at least 15 months dropped for the second straight quarter as McDonald's Corp. and Burger King Holdings Inc. lured more customers. "It is now time for Wendy's shareholders to decide the future of their company," May wrote.[9]
The move would have resulted in Peltz effective control of the company. In January, Wendy's had announced that the strategic options review by a Special Committee of its Board of Directors was nearing the final stages of the review process. Wendy's set up a Special Committee in April last year to review strategic options to boost shareholder value while releasing its first quarter financial results.[5] Peltz has pressured the chain to sell itself after it underperformed competitors. Wendy's board appointed a committee last April to explore a possible sale after the company spun off its Tim Hortons coffee -and-doughnut division, the biggest driver of its profit in recent years.[27] Peltz's group has invested in other companies including Cadbury Schweppes PLC (CSG), specialty chemical company Chemtura Corp. (CEM) and luxury retailer Tiffany & Co. (TIF). Earlier this year, Trian proposed an overhaul of Wendy's board of directors.[5]
BOSTON, Apr. 18, 2008 (Thomson Financial delivered by Newstex) -- Billionaire Nelson Peltz 's Trian Fund Management L.P., a hedge fund, Friday sent a letter to Wendy's International (NYSE:WEN) Inc., saying it is 'very concerned' about the current direction of the company.[6] Billionaire investor Nelson Peltz is a 9.8% stakeholder in Wendy's and is also chief executive officer of Trian and chairman of Triarc.[5]
Nelson Peltz, who controls interests that own 9.8 percent of Wendy's shares, began pushing for change at the company more than two years ago, including winning an effort to put handpicked candidates on the board.[7] Pickett said the proposal for a combination of Wendy's and Arby's puts a value on Wendy's "significantly below a level we had previously told you very clearly would be unacceptable. That fact is important to our shareholders' judgment about the sincerity of your claimed efforts." Wendy's shares rose 28 cents, or more than 1 percent, on Friday to $25.38, just above its 52-week low of $22.18.[20] Over the nearly nine months since you first publicly announced your interest in buying Wendy's for up to $41 per share, your private actions and public statements have been inconsistent. Most recently, in your latest public letter this morning, you noted that you had made a proposal "for the combination of Wendy's and Arby's". We believe that is very misleading to our shareholders unless they also know that the value you ascribed to Wendy's in such proposal was significantly below a level we had previously told you very clearly would be unacceptable. That fact is important to our shareholders' judgment about the sincerity of your claimed efforts.[24]
Pickett said in a letter to May that ever since Peltz expressed interest in buying Wendy's for up to $41 per share, May's "private actions and public statements have been inconsistent," according to Wendy's SEC filing.[20] Peltz and Trian currently hold a 9.8% stake in Wendy's, whose shares closed Thursday at $25.10.[26]
Wendy's shares rose eight cents to US$25.18 in trading Friday on the New York Stock Exchange. That was still closer to the low end of its 52-week range of $22.18 to $42.22, which had been reached last summer, not long after the special committee was formed.[12] Wendy's shares (WEN) rose 28 cents, to $25.38, in New York Stock Ex-change composite trading.[9]
Dllrrs 900 million plus some unspecified amount of stock? The shareholders should actually be happy the committee rejected it. Its shares rose slightly in trading today.[14]
The company is expected to report a profit of $0.17 per share, up from last year's mark of $0.15 per share. In its last earnings release, which came out on February 4, Wendy's reported income from continuing operation for the fourth quarter of $14.1 million, or $0.16 per share. This compared to $9.9 million or $0.09 per share in the prior year.[13] Wendy's shares rose 28 cents to $25.38. BrainCells Inc., a San Diego-based company that uses its technology to develop treatments for central nervous system diseases, said it has raised an additional $20 million in an extension of its Series B financing, bringing the total funding round to $50 million.[19]
Peltz beneficially owns 8.6 million Wendy's shares, representing a 9.8% stake in the Dublin, Ohio-based company.[22]
Wendy's declined to comment on Friday. It said in January that the review was nearly complete. Through Trian and with his allies, Peltz controls 9.8 percent of Wendy's stock, according to the regulatory filing. [15] Trian now plans to reach out to Wendy's shareholders for support. It looks like Peltz is going to have to come up with something a bit more lucrative to win them over.[14] Wendy's board has been weighing a sale since last June and on Friday said Peltz was misleading shareholders.[8] "There's not enough information disclosed in the letter. I do think that it is in shareholders' interest to vote on these offers." Wendy's is to hold its regularly scheduled board meeting over two days beginning Tuesday, according to an internal memo to employees that was obtained by The Dispatch. The memo also said the company has not set a date for its annual shareholders meeting, which typically had been set by this point in past years.[7] May said Trian intends to contact other shareholders for a meeting to vote on Wendy's future direction.[12] "As a large shareholder of Wendy's, Trian is very concerned about the current direction of Wendy's," the letter said.[12]
Trian appears to be the lead in the group as far as signing the letter, and the letter says it is very concerned about the current direction of Wendy's.[25]
The filing also said a special committee formed a year ago to consider options for Wendy's future, including a possible sale, will have further announcements "in the very near future." [7] Every proposal received by the Special Committee has been given fair and proper consideration. The timing of the rejection of your latest proposals is attributable to their inadequacy and to our strong belief that our shareholders need to have the Special Committee process concluded. I will limit this public response to the correction of these particular misleading statements. The Special Committee expects to have further announcements regarding the recommendation of its strategic review in the very near future.[24]
Pickett said the committee's recommendation on Wendy's would come "in the very near future.''[27]
In the first quarter, sales at U.S. company stores opened at least a year, a key indicator of success, fell 1.6 percent and 0.1 percent for franchise stores. Wendy's plans to release its first quarter results April 25. It has not yet set a date for its annual meeting, which normally occurs in the spring. [20] In the first quarter, sales at U.S. company stores open at least a year, considered a key indicator of a retailer's success, fell 1.6 per cent and 0.1 per cent for franchised stores. Wendy's is scheduled to release its first quarter results April 25. It has not set a date yet for its annual meeting, which normally occurs in the spring.[12]
Wendy's noted that the review process took longer than anticipated on account of the turmoil in the financial markets. The Dublin, Ohio based company had completed its spin-off of Tim Hortons in the third quarter of 2006, followed by the sale of Baja Fresh Mexican Grill during the fourth quarter of 2006.[5]
Wendy's directors have been weighing a sale of the company since June 2007 under pressure from Peltz, who has been pressing for a better financial performance. Earlier this month, Wendy's said first-quarter sales at restaurants open at least 15 months fell at both franchised and company-owned locations, hurt by bad weather and an early Easter.[11]
One called for a merger between Wendy's and Arby's, which is owned by Peltz's holding company Triarc.[14] Peltz also serves as chairman and CEO of Triarc (NYSE:TRY), which in November submitted a bid to buy Wendy's for a price less than what it previously had said it was worth, reportedly between $3.2 billion and $3.6 billion.[4] Triarc, based in Atlanta, said in November that it made an offer that was less than $3.2 billion. In February, Peltz said he plans to nominate six candidates to the company's board.[27] The longer the fast-food chain fights off an offer from Nelson Peltz's Trian, the lower the company's value falls.[23]
Peltz gained three seats on the company's board last year and Trian has proposed expanding the board to 15 members.[12]
The move would have given Peltz, who has a 9.8% stake in Wendy's, effective control of the company. Wendy's is scheduled to release its quarterly results on April 25.[13] Peltz has previously told Wendy's chairman that Triac would be a natural buyer for the hamburger chain.[20] The main suitor in the campaign to acquire Wendy's International Inc. is expressing disdain with the direction of the chain after it spurned two recent acquisition bids.[4] An SEC Filing this morning shows activists are going to go after Wendy's International Inc. (NYSE: WEN) with a little more publicity than mere private letters.[25]
One proposal called for combining Wendy's and Triarc's Arby's sandwich chain. [11] Triarc, the owner of the Arby's fast-food chain, offered to buy Wendy's last year.[27]
Peltz has previously told Pickett that Triarc would be a natural buyer for Wendy's.[12] Peltz and other activist shareholders have pushed Wendy's to make big changes, including spinning off and selling operations and slashing corporate expenses.[12]
Trian also said that it will seek to call a special meeting of shareholders.[13] As we can tell, that is financing that is not Trian's or Triarc's to offer. It belongs to the shareholders of the SPAC. I believe our shareholders would consider that a substantial third party financing condition.[24] Triarc released a wounded response that raised the specter of a proxy fight: "Our proposals would have required the approval of the shareholders on each side of the transaction and neither of the proposals was conditioned on the receipt of third party financing."[23] Before any transaction is considered, shareholders should be fully updated on the current financial condition of the company, including sales, profits and margins.[25] We checked Capital IQ's database and the company isn't an easy one to push around, although it isn't exactly one that can lock the doors and pray for the best while the world burns. It requires a 67% vote by the board to approve any transaction, and 75% of shareholders are need to approve any transaction without board approval.[25]
The board is considered a classified board, and it does have cumulative voting for board seats. Its 15 member board also has 3-year terms. The provisions do allow for shareholders to act by written consent, so this letter at least has to be acknowledged.[25]
The San Antonio-based company said in a regulatory filing that it plans to take a $374 million first-quarter pretax charge against earnings because of the job cuts. [19] Wendy's (NYSE:WEN), which runs more than 6,600 restaurants, in 2007 recorded profit of $87.9 million on $2.45 billion in revenue.[4] Wendy's shares closed yesterday at $25.38; the 52-week high is $42.22.[7] Wendy's shares were basically unchanged pre-market after closing at $25.10 yesterday, but shares are now up almost 1% at $25.34 right after the open.[25]
The shares reached as high as $42.22 last summer, not long after the special committee was formed.[20] Last summer Peltz and his investing vehicle, Trian, offered between $37 to $41 a share.[23] The activist hedge fund initially announced an interest in purchasing the fast food chain for $41 per share.[3]
Trian, combined with affiliated funds, has a nearly 10 percent stake in Wendy's. [4] Investors also could view Wendy's as a company that is primed for the kind of turnaround that has been engineered by competitors McDonald's and Burger King, Lombardi said. "There are a lot of ways to speculate," he said.[7] When talk of a possible sale of Wendy's surfaced, other possible bidders included a group led by David Karam, an Upper Arlington franchisee, and a group led by the former head of CKE Restaurants, the operator of the Carl's Jr. and Hardee's chains.[7] Revenue slumped at Wendy's following the death of founder Dave Thomas in January 2002, with sales at older stores dropping six quarters in a row before former Chief Executive Officer Jack Schuessler resigned in April 2006. He was replaced by Kerrii Anderson.[27] For the recent first quarter, Wendy's reported lower average same stores sales, hurt by a shift in Easter holiday and severe winter weather.[5]
Peltz's Triarc Cos. owns Arby's, which has more than 3,000 restaurants. Residential retreat AT&T; slashes more jobs as landline phones fade AT&T; Inc. said it would fire about 4,650 workers, trimming the managerial ranks in its fading home phone business after more than 100 billion in acquisitions. [15] Peltz's Triarc Cos. (nyse: TRY - news - people ) owns Arby's, which has more than 3,000 restaurants.[20]
The company's shares gained 50 cents, or 454.55 per cent, to close at 61 cents on more than 17.2 million shares traded on the TSX Venture Exchange. [16] The shares fell back 13.5 cents to close at 47.5 cents on more than 4.9 million shares traded. Thursday, the company announced that tests of its lead cancer drug, PhG-alpha-1, proved effective against the two types of cancer.[16]
Jon Ogg is a producer and editor of the Special Situation newsletter and the "10 Stocks Under $10" weekly newsletter for 247Wallst.com. [25]
SOURCES
1. Free Preview - WSJ.com
2. Free Preview - WSJ.com
3. Investerms.com - The Wendys Versus Peltz Drama Unfolds
4. Wendy's suitor upset after 2 bids rejected - Business First of Columbus:
5. Trian Says Wendy's Rejected Two Acquisition Proposals - Update [WEN] - RTTNews, Today's Top Stories, Global Newswires, ToDay's Top News,Global Business news .
6. Trian Fund Management very concerned about Wendys current direction
7. The Columbus Dispatch : Peltz calls on Wendy's to put sale to a vote
8. Wendy's rejects offers, says Peltz misleading | Deals | Reuters
9. Wendy's has rejected two takeover bids | APP.com | Asbury Park Press
10. Wendy's rejects Arby's overture
11. TheStar.com | Business | Peltz seeks special Wendy's meeting
12. The Canadian Press: Wendy's investor Peltz wants special shareholder meeting to discuss takeover bid
13. Trian Says Wendy's Rejected Two Offers [WEN] - RTTNews, Today's Top Stories, Global Newswires, ToDay's Top News,Global Business news .
14. Wendy to Nelson: Drop Dead - News Blog - Daily Brief - Portfolio.com
15. Business Glance - Salt Lake Tribune
16. London Free Press - Business - Business Briefs
17. Dayton, Ohio Weather, News, Sports and Entertainment WDTN.com, 2 On Your Side News and Weather: Wendy's investor wants special shareholder meeting
18. Wendy's says Peltz misleading investors | Markets | Bonds News | Reuters
19. SignOnSanDiego.com > News > Business -- 4,600 to lose jobs as AT&T; shifts resources
20. Wendy's investor wants special shareholder meeting - Forbes.com
21. Investor Nelson Peltz wants look at rejected offers for Wendy's -- chicagotribune.com
22. Wendy's Rejects 2 Buyout Offers
23. Deal Journal - WSJ.com : Wendy's Costly Frosty
24. Letter From Trian to Wendy's, and the Response - WSJ.com
25. 24/7 Wall St.: Activists Come Knocking Harder At Wendy's Doors (WEN, TRY)
26. Trian 'Very Concerned' With Wendy's Current Direction
27. Bloomberg.com: Worldwide
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