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May-01-2008Wendy's CEO says sale to Arby's owner offers greatest value(topic overview)
CONTENTS:
- Wendy's International Inc. agreed to merge with the company that owns Arby's shaved roast beef sandwich restaurants because it was the best deal the nation's third-largest hamburger chain could get for its shareholders, Chief Executive Kerrii Anderson said Wednesday. (More...)
- Wendy's and Arby's will have 10,000 restaurants and sales of 12.5 billion, though they will still be run as separate units after the closing of the deal, expected in the second half of the year. (More...)
- After more than two years of bickering, Wendy's International and billionaire investor Nelson Peltz have tied the knot, but whether this is a marriage for the ages, or just a dysfunctional one, remains to be seen. (More...)
- Peltz and May also lead Trian, a hedge fund that now owns 9.8 percent of Wendy's stock. (More...)
- The company would be out $21 million, as it is committed to paying $6 million in taxes on Anderson's behalf, the Columbus (Ohio) Dispatch reported. (More...)
- Shares have traded between $22.18 and $42.22 over the past year. (More...)
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Wendy's International Inc. agreed to merge with the company that owns Arby's shaved roast beef sandwich restaurants because it was the best deal the nation's third-largest hamburger chain could get for its shareholders, Chief Executive Kerrii Anderson said Wednesday. That was the conclusion of a special board committee that Wendy's formed to study options for the Dublin,Ohio-based company, said Anderson, making her first public comments on the proposed sale to Triarc Companies Inc. The deal was announced last week. "The Wendy's board appreciates the patience and the dedication of our shareholders, franchisees and employees during this process," Anderson said in a conference call with analysts. "As these two organizations merge, we are committed to supporting employees and franchisees so that we can all focus on our brand and our customers." [1] Kerrii Anderson, chief executive of Wendy???s International, might be entitled to as much as $14.8 million in compensation if she leaves the company as expected upon the burger chain'''s formal acquisition by the parent of Arby'''s, according to a regulatory filing. Anderson will leave Wendy'''s after a transition period if the sale to Triarc Cos. is approved by shareholders of both companies.[2] The departure of Wendy's CEO Kerrii Anderson after the fast-food chain's pending acquisition could cost the company more than $20 million, according to a regulatory filing. Ohio-based Wendy's International Inc. (NYSE:WEN), which last week agreed to be acquired by Arby's parent Triarc Companies Inc. (NYSE:TRY) for $2.34 billion, said in a filing with the Securities and Exchange Commission that Anderson's departure would cost $20.8 million as of Dec. 30, including $5.98 million in taxes the company would pay on her behalf.[3]
A few contingencies need to be met for Anderson to receive the entire package, which includes $4.85 million in severance pay, $2 million in incentives and $6.8 million in equity. Triarc, owners of Arby's, has said that its chief executive Roland Smith would lead both Arby's and Wendy's. Some Wendy's executives, including Anderson, are entitled to "terminate his or her employment ''' after a change in control," the Securities and Exchange Commission filing said.[4] Anderson, who has led the burger chain since 2006, could receive up to $4.85 million in severance pay, $2 million in incentives, and $6.8 million in equity, according to the filing. The filing indicates that certain executives, including Anderson, '''may terminate his or her employment ''' after a change in control for good reason if the company changes the. executive'''s status, title, position or responsibilities in a way that does not represent a promotion.''' Triarc already has said it will replace her with Roland Smith, currently Triarc'''s chief executive.[2]
Anderson served as interim CEO for more than six months before being given the job permanently in November 2006. Before that, she had served as the company's chief financial officer. Wendy's has been under pressure from its biggest investors since operating results declined in 2005 and 2006. The company has made efforts to boost its bottom line, and Anderson has presided over a turnaround plan meant to improve results. Triarc already has said that if the merger is completed, it will replace her with Roland Smith, currently Triarc's chief executive. John Owens, a Morningstar analyst, said his firm generally frowns on so-called golden parachutes for executives. He was willing to give Anderson some latitude. "Kerrii Anderson wasn't given much of an opportunity in terms of time to turn around the business," he said. "It's almost as if she got pulled out of the game before the game was over."[5] The plan calls for Kerrii Anderson to be replaced by Triarc's CEO. Wendy's International will jettison its current chief executive if a proposed merger with the parent company of Arby's is approved, but Kerrii Anderson likely will have a golden parachute to cushion her landing.[5] DUBLIN, Ohio, April 30 (UPI) -- Wendy's International Chief Executive Kerrii Anderson could get $14.8 million if a merger with Triarc Cos. is completed, U.S. security filings show Wednesday.[4] COLUMBUS, Ohio — Kerrii Anderson, who has led Wendy's International Inc. through a tumultuous two years as chief executive leading to last week's announcement that the chain would be sold, received compensation worth US$3.9 million in 2007, the company said in a regulatory filing Monday.[6]
LOS ANGELES, April 30 (Reuters) - A proposed merger of Arby's owner Triarc Cos Inc (TRY.N: Quote, Profile, Research ) and Wendy's International Inc (WEN.N: Quote, Profile, Research ) could boost incremental EBITDA by $100 million within two to three years, Triac Chief Executive Roland Smith said on Wednesday.[7] Triarc Cos. (TRY) executives left little doubt Wednesday that, if the company's acquisition of Wendy's International Inc. (WEN) is consummated, who will be in charge. They will. During a conference call with investors, Triarc Chief Executive Roland Smith and Chief Financial Officer Steve Hare dominated the conversation as they laid out tentative plans for a dual-branded fast-food company.[8]
Atlanta-based Triarc, owned by billionaire investor Nelson Peltz, has said it will pay about $2.34 billion in an all-stock deal for Wendy's. Triarc CEO Roland Smith will become CEO of both brands.[1] The deal's value varies based on the price of Triarc's shares, making it worth $29.325 per Wendy's share, or about $2.56 billion, based on Wednesday's closing price. Triarc CEO Roland Smith will become CEO of both brands.[9]
Combined pro forma net debt would be $903 million - $545 million of that on Triarc's side. Triarc's executives said they envision a "moderately leveraged new company with a flexible capital structure." With more than 10,000 restaurants in the U.S., the combined company would look to expand overseas, where both brands now lag such fast-food rivals as McDonald's Corp. (MCD), Burger King Holdings Inc. (BKC) and Yum Brands Inc. ( YUM). As reported, Triarc has offered about $2.4 billion in its stock for Wendy's, the nation's third-largest hamburger chain. The deal, which awaits approval by shareholders of both companies, could be completed later this year.[8] Peltz controls nearly 10 percent of Wendy's and had pressed for better results at the chain. The deal is expected to close in the second half of this year. Smith said goals for the combined company, which will now include more than 10,000 U.S restaurants and some $12.5 billion in system-wide sales, were profit margin improvement, revitalizing the Wendy's brand and making its corporate structure more efficient.[7]
The deal is expected to close in the second half of the year. Smith said Wednesday that he thinks Wendy's and Arby's restaurants have growth opportunities by expanding breakfast, snack and late-night menu offerings. He also reiterated that the proposed merger should improve cost controls over food, labor and other expenses, generating $100 million a year in operating profits over time. He also expects another $60 million in savings by eliminating duplicate corporate functions and streamlining support services.[1]
The deal is expected to close in the second half of the year. Anderson's departure could cost Wendy's a total of $21 million, after the company pays about $6 million in taxes on her behalf, according to the filing late Monday with the Securities and Exchange Commission.[5] The deal is expected to close in the second half of the year. Wendy'''s would be on the hook for a total of $21 million if Anderson departs, because the company also would pay about $6 million in taxes on her behalf, according to the filing late yesterday with the Securities and Exchange Commission. The $14.8 million represents the total Anderson could have received if she was '''terminated by the company without cause on Dec. 30, 2007, following a change in control of the company,''' the filing says. Several conditions have to be met for her to receive the total.[2]
Amy Borrus, deputy director of the Council of Institutional Investors, a shareholders advocacy group, called companies' tax payments for departing executives "an appalling waste of shareholders' money." The $14.8 million figure represents what Anderson could have received if she was "terminated by the company without cause on Dec. 30, 2007, following a change in control of the company," the filing says. Several conditions have to be met for her to receive the total, which includes up to $4.85 million in severance pay, $2 million in incentives, and $6.8 million in equity.[5]
Anderson might be entitled to as much as $14.8 million in severance and other benefits, according to a regulatory filing. Anderson will leave Wendy's after a transition period if the sale to Triarc Cos. is approved by shareholders of both companies.[5] Peltz's company, Triarc Cos. Inc. announced Thursday, April 24 a definitive merger agreement had been signed with Wendy's International. If the merger is approved by stockholders of both companies, the combination will create the third-largest, quick-service restaurant company in the U.S. with an anticipated 12.5 billion in annual sales.[10] ATLANTA & DUBLIN, Ohio--( BUSINESS WIRE )--Triarc Companies, Inc. (NYSE: TRY, TRY.B, "Triarc"), the franchisor of the Arby's restaurant system ("Arby's"), and Wendy's International, Inc. (NYSE: WEN, "Wendy's") announced today that they will host a conference call today, April 30, 2008 at 4:00pm Eastern Time to discuss the definitive merger agreement between Triarc and Wendy ' s.[11]
While the company and its franchises opened 11 new Wendy's restaurants -- three company-operated and eight franchises -- in 2007's first quarter, it also closed a number of underperforming restaurants, leaving Wendy's with 6,658 restaurants at the end of the first quarter, down from 6,673 at the end of 2006 and 6,745 at the end of the first quarter of 2006. Triarc is best known for its ownership of Arby's, and both Arby's and Wendy's will operate as autonomous brand business units, with Triarc headquarters based in Atlanta, Ga., and Wendy's International headquarters remaining in Dublin, according to an information release from Triarc and Wendy's.[10]
Triarc Companies Inc., which owns Arby's and now Wendy's, will pay about $26.78 per share for Wendy's and declined comment on the deal. Wendy's had experienced a 72 per cent drop in earnings in the first quarter of this year.[12] Last week, Atlanta-based Triarc Companies Inc., owned by billionaire investor Nelson Peltz, said it will pay about $2.34 billion in an all-stock deal for Wendy's.[6] Last week, Triarc, the investment arm of billionaire investor Nelson Peltz, announced that Wendy's had agreed to be bought in a deal valued at about $2.4 billion.[7]
Last week's deal is rooted in a long and contentious campaign by Peltz, an activist investor who has pushed for change at H. J. Heinz, Cadbury Schweppes and Kraft. Two of his investment vehicles played roles in the eventual sale of Wendy's. Peltz is the chairman of Triarc, and both he and its vice chairman, Peter May, own 35 percent of the company's stock.[13]
Sales were flat at $2.4 billion. Wendy's said Thursday that its first quarter profit was down 72 per cent to $4.1 million, or 5 cents a share, in part because of expenses tied to the work of a special board committee that has been studying ways to boost the company's stock.[6]
Anderson, 50, joined Wendy's in September 2000 as executive vice president and chief financial officer and became president and CEO on Nov. 9, 2006. She received $3.27 million in total compensation for 2007 and $4.17 million in 2006. The largest portion of her payout would come from $6.77 million in unvested, restricted stock and stock units. Another $4.85 million would come in the form of severance and another $2 million in incentive payouts.[3] Anderson received a 2007 salary of $950,000 and non-equity incentives of $375,250. She also received stock and options awards valued at $2.5 million on the date they were granted, according to the filing. Anderson received other compensation of $67,897 that included $25,000 in legal costs paid by the company in connection with the completion of her employment agreement.[6] Borrus called the potential payout "pretty steep" compared with Anderson's 2007 compensation. It totaled $3.9 million, according to an Associated Press calculation that included salary, bonus, incentives, perks, above-market returns on deferred compensation, and the estimated value of stock options and awards granted during the year. That was down from $6.7 million in 2006, by AP's figuring. "Executives shouldn't make more after they leave than they would have if they'd stayed," Borrus said.[5]
Associated Press calculations of total pay include executives' salary, bonus, incentives, perks, above-market returns on deferred compensation, and the estimated value of stock options and awards granted during the year. The calculations don't include changes in the present value of pension benefits, and they often differ from the totals companies list in the summary compensation table of proxy statements filed with the U.S. Securities and Exchange Commission.[6]
The combined company will trade as WEN on the New York Stock Exchange with Smith as CEO. Arby's and Wendy's will operate autonomously, with Smith also serving as CEO of the Wendy's brand, replacing current CEO Kerrii Anderson.[7] Anderson is the only confirmed employee who would leave the company if the deal is approved. After a transition period, she would be replaced by Triarc CEO Roland Smith.[3] Triarc owns Arby's shaved roast beef sandwich restaurants. Triarc CEO Roland Smith will become CEO of both brands.[6]
Smith would become CEO of Wendy's while Tom Garrett, Arby's president and chief operating officer, would become CEO of that beef-sandwich brand.[8]
Wendy's and Arby's will have 10,000 restaurants and sales of 12.5 billion, though they will still be run as separate units after the closing of the deal, expected in the second half of the year. The companies said they planned to expand their breakfast and snack offerings, an effort meant largely to catch up with McDonald's and Burger King. [13] As to the future of the company that Dave built in Dublin, "I don't know what is going to happen," said Denny Lynch, Wendy's senior vice president of communications. "It is way too early to predict," he said. Lynch said shareholders from both companies have to approve the transaction. "They will vote, and the votes will be collected," he said. The next step will be to issue a prospectus representing the proposed new company, before officials from both companies go into the final process of closing the deal, he said. "We are looking at three to four months for the stockholders to vote, plus another three or four months before the deal is final," if approved, he said. "I don't think we will have a final resolution until the second half of this year," he said.[10]
The deal will create one of the nation's largest fast-food chains. Wendy's and Triarc agreed to a stock swap in which Wendy's shareholders will receive 4.25 shares of Triarc for each of their shares.[13] The deal was announced last week. "The Wendy's board appreciates the patience and the dedication of our shareholders, franchisees and employees during this process," Anderson said in a conference call with analysts. "As these two organizations merge, we are committed to supporting employees and franchisees so that we can all focus on our brand and our customers."[9] Speaking on a conference call about a week after the deal was first announced, Smith said improvements at the Wendy's chain in earnings before interest, tax, depreciation and amortization (EBITDA) would come in part from "significant opportunities" in labor costs and controllable expenses.[7]
The deal may offer some relief to Wendy's stockholders, whose shares have fallen more than 50 percent in value over the past two years. The company, whose earnings last quarter disappointed Wall Street analysts, has struggled since the death in 2002 of its founder and avuncular spokesman, Dave Thomas. These days, it is contending with a worsening outlook for restaurants and higher prices for ingredients such as beef and chicken, as well as increased transportation costs.[13]
Wendy's shares rose 13 cents to $29 Wednesday. They have traded between $22.18 and $42.22 over the past year.[9] Shares of Wendy's closed Wednesday at $29.00, up 13 cents, or 0.5%. Those of Triarc closed at $6.92, up 1 cent.[8] Triarc shares fell 1 cent to $6.90 Wednesday. They have traded between $5.88 and $18.23 over the past year.[9]
The Triarc executives contemplate achieving about $100 million in potential profit-margin improvement over two to three years, and about $60 million in operational efficiencies and synergies during that same period.[8] An 8-K filing by Wendy's on Wednesday disclosed that, should the merger agreement be terminated by Wendy's, it would owe Triarc a $10 million breakup fee.[8] The merger news overshadowed a dismal earnings report by Wendy's, which disclosed 4.1 million in operating profit for the first quarter, a drop of nearly 72 percent from the period last year.[13]
The combined systems will have about 10,000 restaurant units. If the merger is approved by stockholders, the new company expects to pursue expansion, primarily focused on breakfast, global expansion for both brands, and growth through further acquisitions and new unit development. The merger must be approved by a majority of stockholders in both companies, Triarc spokeswoman Carrie Bloom said A consolidated support center to be based in Atlanta will oversee all public company responsibilities and other central service functions.[10] The call will be webcast live at www.Triarc.com under the investor relations section and at www.wendys-invest.com. Triarc is a holding company and, through its subsidiaries, is the franchisor of the Arby's restaurant system which is comprised of approximately 3,700 restaurants, of which, as of December 30, 2007, 1,106 were owned and operated by its subsidiaries.[11] Wendy's, the financially troubled fast-food chain, said last week that it had agreed to sell itself for 2.3 billion to Peltz's Triarc Cos., the parent of the Arby's restaurant chain.[13] Popular fast food eateries Arby's and Wendy's are shown adjacent to one another along "fast food row" near downtown Jackson, Miss., Thursday, April 24, 2008. After two past rejections, the owner of Arby's shaved roast beef sandwich restaurants is buying Wendy's, the fast-food chain famous for its made-to-order square hamburgers and chocolate Frosty dessert, for around $2 billion.[13] The company, which runs more than 6,600 restaurants, when merged with Arby's will create the third-largest quick-service restaurant chain in the U.S., with approximately $12.5 billion in annual sales and more than 10,000 restaurants.[3]
The third-largest U.S. hamburger restaurant owner, which put itself up for sale last June, has been struggling to regain market share lost to rivals, whose results have been boosted by international sales.[7] Sales at company-owned stores opened at least a year, considered a key indicator of a retailer's strength, fell 1.6 per cent in the quarter and 0.1 per cent at U.S. franchise restaurants.[6]
After more than two years of bickering, Wendy's International and billionaire investor Nelson Peltz have tied the knot, but whether this is a marriage for the ages, or just a dysfunctional one, remains to be seen. [13] For billionaire investor Nelson Peltz, the third try in his search for Wendy might be the charm -- provided stockholders agree.[10]
Peltz and May also lead Trian, a hedge fund that now owns 9.8 percent of Wendy's stock. Peltz began pushing for changes at Wendy's late in 2005, after disclosing he held a 5.5 percent stake in the company. [13] Substantial corporate overhead savings are expected In July 2007, Wendy's officials and stockholders began to take a look at the company's future after reports of a 71-percent decline in stock value in late April.[10] The contemplated stock symbol for the merged company would retain Wendy's WEN.[8]
During the conference call, Smith and Hare said intentions are for the combined company's name to have Wendy's in it first.[8] Wendy's repeatedly rebuffed Triarc's proposals. In February, Peltz threatened a proxy fight, saying he would name six candidates for the company's board.[13]
Trian continued to urge Wendy's to consider a sale despite the credit squeeze, while Triarc said it was willing to make an offer.[13]
Associated Press - April 28, 2008 9:35 PM ET COLUMBUS, Ohio (AP) - Kerrii Anderson, who has led Wendy's International Inc. through a tumultuous two years leading to last week's announcement[14] Although Wendy's President and CEO Kerrii Anderson was on the call and made brief remarks, there was no mention of any post-merger role for her. In her statement, Anderson said her management team was "committed to making the transition as smooth and seamless as possible."[8]
Anderson took over as interim CEO in 2006 after the abrupt retirement of Jack Schuessler and got the job permanently in November 2006. Since Anderson took over, the third-largest hamburger chain in the United States completed the spinoff of the Tim Hortons coffee-and-doughnut chain, sold its money-losing Baja Fresh Mexican Grill chain and cut 355 corporate jobs.[6] The company announced Anderson's earnings in a regulatory filing today. Since Anderson took over in April 2006, the nation's third-largest hamburger chain has completed the spinoff of the Tim Hortons coffee & doughnut chain, sold its money-losing Baja Fresh Mexican Grill chain and cut 355 corporate jobs.[14]
The company would be out $21 million, as it is committed to paying $6 million in taxes on Anderson's behalf, the Columbus (Ohio) Dispatch reported. [4] Wendy's (NYSE:WEN) closed 2007 with profit of $87.9 million on revenue of $2.45 billion.[3] If approved, the joining of the fast-food giants could bring in 12.5 billion a year; Dublin leaders await word on the status of Wendy's home office.[10] Dublin city officials also are waiting. "Frankly, we don't know what this means for us yet," said Dana McDaniel, Dublin's deputy city manager and director of economic development. "Wendy's is an important company not only to us, but they are important from a regional standpoint and to the state as well," McDaniel said.[10]
Wendy's International, Inc. is one of the world's most successful restaurant operating and franchising companies, with more than 6,600 Wendy's restaurants in the United States, Canada and international markets.[11] Last week, May and James Pickett, the chairman of Wendy's, sparred in an exchange of letters.[13]
Shares have traded between $22.18 and $42.22 over the past year. [1]
SOURCES
1. Wendy's CEO says sale Arby's owner offers greatest value
2. The Columbus Dispatch : Wendy's CEO could pocket up to $14.8 million upon exit
3. Departing Wendy's CEO in line for $15M payout - Wichita Business Journal:
4. Wendy's CEO could receive $14.8 million - UPI.com
5. The Columbus Dispatch : Wendy's going large on CEO switch
6. The Canadian Press: Wendy's chief executive received 2007 compensation valued at US$3.9M
7. UPDATE 1-Triarc/Wendy's deal could boost EBITDA by $100 mln | Markets | Markets News | Reuters
8. Triarc CEO Smith Will Be CEO Of Wendys Brand Post-Merger
9. Wendy's CEO says sale to Arby's owner offers greatest value
10. Columbus Local News: Region > News > Triarc, Wendy's to merge
11. Triarc and Wendy's to Host Conference Call to Discuss the Merger
12. WHKP 1450 AM Radio - Arby's Buys Wendys
13. After years of squabbling, Wendy's and Arby's unite - Salt Lake Tribune
14. WTOL.com, Toledo's News Leader, News 11 | Wendy's CEO received 2007 compensation valued at $3.9M
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