Peltz makes offer for Wendy's
Nov 15, 2007

Nov. 14 (Bloomberg) -- Nelson Peltz's Triarc Cos. made an offer for Wendy's International Inc. that was less than the $3.2 billion the investor said he might pay in July.

Peltz's bid makes it unlikely that Wendy's will accept his offer, analysts and investors said. The billionaire investor, who has pressured Wendy's management to boost its stock price since buying a stake in 2005, made the offer after the third- largest U.S. hamburger chain said a possible sale was being delayed by turmoil in the credit markets last month.

The bid is below the range of $37 to $41 a share that Peltz had said he'd consider proposing, the investor's Trian Fund Management LP said yesterday in a regulatory filing. Peltz didn't disclose the size of the cash and stock offer.

``I'm sure there is a temptation to stick with that plan,'' said Ron Paul, president of Chicago-based restaurant consultant Technomic Inc. ``Management generally believes they can fix things and in this case I think they bought themselves some time. I don't see them rushing into it.''

Wendy's formed a special committee to explore a sale in April after Peltz, whose fund is the company's largest shareholder, urged management to increase profit and cut costs. The activist investor also owns the Arby's fast-food chain through his stake in Triarc.

The ``Triarc bid is far from a done deal,'' Rachael Rothman, an analyst at Merrill Lynch & Co. who recommends investors hold their shares, wrote in a note today.

Wendy's Stock

A deal for more than $35 a share is unlikely, she said. If a buyout doesn't occur, the stock may fall to $26 to $30 a share, the New York-based Rothman said.

Wendy's fell 98 cents, or 3.1 percent, to $30.67 at 4:34 p.m. in New York Stock Exchange composite trading. Wendy's declined 7.3 percent this year while McDonald's rose 28 percent.

The collapse of the market for subprime mortgages, which are made to people with poor credit or high levels of debt, has resulted in stricter lending standards and higher borrowing costs.

``Most of us who watch this didn't really think that the numbers he was talking about would hold true now because of the change in the credit world that has transpired over the past three months,'' said Dennis Lombardi, executive vice president of foodservice strategy at WD Partners in Dublin, Ohio.

`Less Available'

Financing is ``less available and more expensive, and deals are harder to do, therefore prices go down,'' Lombardi said.

Wendy's profits have been hurt in the past year by higher beef and dairy prices and competition from McDonald's Corp.

``It's a matter of fixing the chain, not the industry,'' Paul said.

Trian said the bid depends on the kind of funding a transaction might get. Carrie Bloom, the fund's spokeswoman, declined to comment beyond the filing.

The deadline for bids for the company was Nov. 12 at 5 p.m., the New York Times reported.

Wendy's spokesman Denny Lynch declined to comment. The company said it continues to evaluate its options.

Company franchisee David Karam, who owns more than 100 stores, previously told the Associated Press that he would consider a bid for the company. Karam declined to comment today.

Peltz and other investors successfully lobbied Dublin, Ohio-based Wendy's to spin off its Tim Hortons Inc. donut unit and sell its Baja Fresh Mexican Grill restaurants in 2006.

Heinz, Cadbury

He has also made investments in other companies to agitate for change, including Heinz Co., where he won a board seat and pushed for more spending on marketing in the U.S. Peltz helped persuade Cadbury Schweppes Plc to consider the sale or spinoff of its U.S. drinks division.

Last week, Kraft Foods Inc. added two board members backed by Peltz after he acquired a stake in the company.

Peltz controls a 9.8 percent stake in Wendy's through Trian, a hedge fund he started in November 2005 with Peter May and Ed Garden. Peltz is also the largest shareholder of Triarc, which was formed in 1993 when he and May purchased a stake in DWG Corp., the owner of Arby's, and changed its name to Triarc.

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.

To contact the reporter on this story: Josh Fineman in New York at jfineman@bloomberg.net
Last Updated: November 14, 2007 17:23 EST


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