Wendy's International (NYSE: WEN) may not see an auction-style sale after all. After months of speculation about the fate of the global burger flipper, the sale of the company may be on indefinite hold due to continued turmoil in the credit markets. What this means is that Wendy's will remain for sale after a short intermission. The length of that intermission may be six months or longer.Although bids on the company are due today at 5:00 pm EST, the company may pull the rug out from under the bids it has received so far and put the sale of the company on hold. Activist investor Nelson Peltz, who said he has been interested in buying the company (and who pushed for a sale) will most likely
have to go home empty-handed today.
The problem is the financing provided by the banks servicing Wendy's at this time. Apparently, the conditions of such a sale by the chain's two largest bank creditors contain details that could leave a nasty taste in the mouth of bidders; a sales contract clause gives the two banks (JPMorgan and Lehman Brothers) the right to withdraw financing if the credit markets continue to deteriorate further. Without a crystal ball, who knows when or if that will happen. My guess: the credit market will sink further into 2008. Get ready to ride the wave.
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Reader Comments (Page 1 of 1)
11-23-2007 @ 4:48PM
Dan said...
Everyone knows that private equity is going to ruin the current turnaround that has resulted in 5 consecutive quarters of positive same store growth. More importantly, when will Wendy’s special committee stop entertaining the idea of bringing a whole new strategy to the table that would not only wipe out the progress that is already underway, but would completely erase the Wendy’s culture that Dave Thomas worked so hard to instill in his company?
Even with the turmoil that Peltz and the special committee created, Kerrii Anderson and her team are still moving the ball forward, I can only imagine what they could accomplish if they weren’t having to deal with this mess. I think the special committee should move on and give the current strategic plan a chance.
Nelson Peltz is bad for Wendy's, crisis is around the corner if he has his way.
Check out this article, it is a great analysis:
Kerrii Anderson: Taking Care of Business
http://knowledge.wpcarey.asu.edu/index.cfm?fa=viewArticle&id=1505