071219 Investor Can Pursue Wendy's After Standstill

A new chapter in the possible sale of Wendy's International could begin today as one suitor now is free to increase his holdings or aggressively pursue purchase of the company.

That comes as a result of today's expiration of a "standstill" period included in an August confidentiality agreement between Wendy's and two companies led by activist investor Nelson Peltz, Triarc Cos. and Trian Fund Management.

Triarc, which owns Arby's, submitted a bid for Wendy's several weeks ago but did not reveal details. The company said only that the bid was below the $37 to $41 per share the company previously indicated it was prepared to offer.

One analyst said it wouldn't be surprising if Peltz now begins to amass more Wendy's stock. Peltz and his allies already control nearly 10 percent of Wendy's shares.

The shares, which closed up today at $28.03, are a relative bargain compared with some analysts' $35 target price for the stock, said Ron Paul, president of Technomic, a Chicago restaurant and food research firm.

Peltz "knows at some point something's going to happen with Wendy's," Paul said. "He's still got them in his sights."

Paul said he thinks a hostile takeover is unlikely. Wendy's management is in a fairly strong position with improving restaurant results, and a takeover would be messy and expensive, he said.

Wendy's agreed in August to open its books to the Peltz-led companies as part of the process of putting itself up for sale.

The standstill period came with a variety of conditions. The potential buyer agreed it would not acquire or seek any shares of Wendy's, call a special meeting of shareholders, solicit proxies or propose a merger.

Wendy's will remain "focused on the things we can control, which is running restaurants," spokesman Denny Lynch said.

A Triarc representative declined to comment when asked about its plans.

The deadline for bids for Wendy's reportedly was in mid-November. Triarc was the only company to go public with its offer, in a filing with the Securities and Exchange Commission.

Two major banks, Citigroup and Merrill Lynch, that were expected to fund Peltz's bid likely will not do so, according to a report by Reuters, which cited unnamed sources. At least two other banks still are willing to participate, Reuters reported.

Other suitors, including J. David Karam, an Upper Arlington franchisee with more than 100 Wendy's restaurants, also have expressed interest in buying the burger chain.

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