Posts for Ticker ‘TRY’

Wendy’s Craters to Peltz, Triarc, Trian… Over The Barrel (WEN, TRY, TUX)

Triarc Companies, Inc. (NYSE: TRY) and Wendy’s International, Inc. (NYSE: WEN) have signed a definitive merger agreement.  According to the release, this has been approved by the
boards of directors of both companies.

The merger appears to be an all-stock buyout entitling Wendy’s shareholders to receive a fixed ratio of 4.25 shares of Triarc Class A Common Stock for each share of Wendy’s common stock they own.  Before Triarc dilution, that looks like a price of $26.775 based on Wednesday’s close.

We did just predict in our Special Situation Investing Newsletter (trials can now see that report) on Monday night that Wendy’s would crater and either go proactive under Peltz’s activism or that it would finally crater to a buyout.  But we predicted that Peltz & Friends would have to come up with $30.00 per share in order to execute a friendly merger or at least one that isn’t quite so hostile.  While we are disappointed with this transaction, this is a stock for stock merger that does at least allow upside if the combined operations can reach the synergies, savings, and growth that it wants to achieve.

It does not appear that Trian Acquisition I Corp. (AMEX: TUX), thePeltz SPAC, is part of this deal other than that the Trian Partnerssponsor will vote in favor of the merger along with Peltz and others(who own roughly 35% of Triarc).  That SPAC involvement may change ifthis deal needs akick-up, but that is just for pondering rather than anything certain. 

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Posted on: April 24, 2008 – 7:58 am in Activist Investor, Food, Mergers and Buy Outs, , ,

Activists Come Knocking Harder At Wendy’s Doors (WEN, TRY)

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.  Trian Fund Management, L.P., Triarc Companies, Inc. (NYSE: TRY) Peter May, Nelson Peltz, Thomas Sandell, and others are in an activist group that have sent a letter to Wendy’s International, Inc. (NYSE: WEN).

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. Trian and Triarc were informed that the Wendy’s special committee had rejected two acquisition proposals made by Trian and Triarc, which had called for the combination of Wendy’s and Arby’s and the other involved an acquisition of 100% of Wendy’s for over $900 million in cash with the balance in stock.

These 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. The letter notes that the most recent proposals were summarily rejected in less than 24 hours.

Before any transaction is considered, shareholders should be fully updated on the current financial condition of the company, including sales, profits and margins. The activist group also expects that the company will not take any action prior to the earnings announcement on April 25.

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.  The problem is that the value has been previously hard to see in Wendy’s and it would not have been exactly cheap for an acquirer.  But this pullback down to the mid-$20’s may actually change this now that its ratios have come in-line or under many of the peers. 

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.  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. Capital IQ also notes that Wendy’s does have an active poison pill.  Lastly, Ohio is that the state of incorporation, and that state is one of the harder ones for hostile mergers or actions against public companies incorporated there.

You can join our open email distribution list to hear about other activist situations, IPO’s, back door plays into IPO’s, spin-offs. break-ups, and other special situations we frequently preview.  We have reviewed this one in months past for the Special Situations newsletter, but the valuations at the time appeared to be a serious obstacle.  Now that it has come in, it looks like it may be time to dust off those notes and see if the relative value is there.

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.  The 52-week trading range is $22.18 to $42.22.  Its current market cap is just shy of $2.2 Billion.

Jon C. Ogg
April 18, 2008

Jon Ogg is a producer and editor of the Special Situation newsletter and the "10 Stocks Under $10" weekly newsletter for 247Wallst.com.

Posted on: April 18, 2008 – 8:32 am in Activist Investor, Food, Mergers and Buy Outs, Private Equity, ,

Wendy’s (WEN) Offer From Peltz, But Price Is Secret

The Associated Press writes "billionaire investor Nelson Peltz submitted an offer to buy Wendy’s  International Inc. (WEN), but the proposed price is below what he previously said the nation’s third-largest hamburger chain is worth, according to a regulatory filing Tuesday."

At one point, Peltz said the fast food chain might be worth $37 to $41. But, the shares trade at under $31.

Triarc Co (TRY), a company owned by Peltz, made the bid.

No one would be surprised if the number was below $34 a share.

Yesterday we noted the possibility and rationale for a "take-under" scenario being quite possible..

Douglas A. McIntyre

Posted on: November 13, 2007 – 6:24 pm in Food, Mergers and Buy Outs, ,

Is Wendy’s Most Likely Scenario A Take-Under? (WEN, MCD, TRY, BKC)

Despite reports that Wendy’s International Inc. (NYSE:WEN) would-be acquisition process is being hampered by liquidity concerns in the credit markets, its stock is actually up about 2% today.  Bids are due today and the concerns are mounting that bidding price will be highly conditional and have more outs than the New York sewer systems.

At $31.90, assuming the fiscal 2007 estimates of $1.22 are accurate, the fast food operator trades just over 26-times this year’s estimates.  McDonald’s (NYSE:MCD) is running much better and it trades at a far cheaper 20.6-times 2007 earnings estimates.

Another issue that may be holding things up Triarc Companies’ (NYSE:TRY) review.  It is still unknown if Triarc will be the ultimate buyer of Wendy’s to roll into Triarc’s Arby’s Franchise or if Triarc will be able to separate itself from its money management operations.  We have reviewed that one for our Special Situation Investing Newsletter, and the verdict is still not in there.

Wendy’s has a 52-week trading range of $29.56 to $42.22, and the 2% rise to $31.90 sure gives ’special situation investors’ looking for buyouts, spin-offs, and restructurings the feeling that maybe Dave Thomas’s baby needs a strong turnaround manager.  By the time the turnaround is in force this liquidity mess in the credit markets may have played itself out.  Then investors might be looking at a much better scenario.  That finally worked well for Burger King (NYSE:BKC) holders.

A would-be bidder is arguably getting to overpay on valuations for a company that still needs a turnaround.  Unless there is a hidden and completely overlooked credit and liquidity environment change, Wendy’s should scrap this review  and fix itself before it seeks a buyer.

Jon C. Ogg
November 12, 2007

Jon Ogg produces the 24/7 Wall St. Special Situation Investing Newsletter; he does not own securities in the companies he covers.

Posted on: November 12, 2007 – 11:33 am in Food, Mergers and Buy Outs, Private Equity, , , ,