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As BloggingStock's Douglas McIntyre wrote earlier today, the Wendy's Intl (NYSE:WEN) hamburger chain has attracted the attention of more than one group of investors interested in taking it private. Monique Curet, of Wendy's hometown paper, The Columbus Dispatch, had some interesting insights into the landscape of a possible purchase, including the news that a full dozen parties are believed to have signed confidentiality agreements in order to study the financials.A point of debate among industry experts is the corporation's worth. Most agree that its current stock price already reflects a pre-sale bump. One group of franchisees considering the purchase is led by J. David Karam of Cedar Enterprises, Inc., who considers the current stock price, in the mid 30's, a problem in light of its trading at 12 times core income.
However, Curet quotes John Hamburger (not a typo) of Restaurant Finance Monitor as saying that franchisees normally buy or sell franchises for four to six times core income, and so may be hesitant to pay the higher multiple that company sales typically bring.
Howard Davidowitz, chairman of Davidowitz and Associates Inc., told her that the recent reinvigoration of McDonald's provides an example of Wendy's potential, which has not come close to being realized. This comparable is sure to entice bidders to reach a bit.
Morningstar analyst John Owens told Curet he believes the stock is worth $35 today as an ongoing business, slightly above today's trading level. He suggested a $41 offer from the best-known suitor Triarc would gain board consideration.
Finally, he speculated that, having started down the sale road, the board will now face a probable decline in its stock price if it decides to not sell, a drop sure to displease its stockholders.
Howard Davidowitz, chairman of Davidowitz and Associates Inc., told her that the recent reinvigoration of McDonald's provides an example of Wendy's potential, which has not come close to being realized. This comparable is sure to entice bidders to reach a bit.
Morningstar analyst John Owens told Curet he believes the stock is worth $35 today as an ongoing business, slightly above today's trading level. He suggested a $41 offer from the best-known suitor Triarc would gain board consideration.
Finally, he speculated that, having started down the sale road, the board will now face a probable decline in its stock price if it decides to not sell, a drop sure to displease its stockholders.
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Reader Comments (Page 1 of 1)
10-26-2007 @ 6:23PM
Dan said...
The current management team for Wendy’s has been working hard on their turnaround for only 9 months and they are already showing great results. After 16 straight months of same store growth, appreciation in stock price, higher profits and positive earnings growth Kerrii Anderson should be congratulated. The Wendy’s turnaround is in full motion and I would hate to see that momentum interrupted by the likes of Peltz.