Wendy's (NYSE: WEN) finally sold the company to Nelson Peltz. The price which Peltz company Triarc paid was about $26.78 per share only a 6% premium according to the AP. One of the reasons the firm went for so little may be that there were no other buyers. The Wall Street Journal writes that "The move puts an end to the year-long saga that began when Wendy's first said it would consider a sale last April after Mr. Peltz began pressuring the chain."
Peltz has gotten a very good deal and Wendy's shareholders have not. The chain's current stock price is near its 52-week low. Over the last six months, the company's shares are down about 23% while rivals Burger King (NYSE: BKC) and McDonald's (NYSE: MCD) are up about 5%. Of course, they are the market share leaders and deserve some premium for that.
But if fast food does well, especially in a poor economy when people cannot afford more expensive restaurants, Peltz will have picked up a prize. When a recovery comes around, Wendy's could become a very nice business and the billionaire will look like a genius.
Douglas A. McIntyre is an editor at 247wallst.com.
Reader Comments (Page 1 of 1)
4-24-2008 @ 4:17PM
NewsVisual said...
In a merger deal that could have been launched by close board-room connections, Triarc Companies Inc, the franchisor of the Arby's restaurant system, is buying out in an all-stock transaction Wendy’s International Inc, the two companies announced on Thursday in a joint statement. The new company will be the nation’s third-largest quick-service restaurant company, with approximately 10,000 restaurant units and sales of approximately $12.5 billion, the statement said. The new company expects to focus on breakfast, global expansion for both brands, and growth through future acquisitions and new unit development. “We believe the combination of Arby’s and Wendy’s will create a powerful new restaurant company and a ‘must own’ restaurant stock with significant upside potential as we execute on the many opportunities we see to expand and improve these two very valuable brands,” said Triarc CEO/Director Roland Smith. “Through the execution of major operating improvements and the realization of synergies, we expect to generate substantial value for shareholders. We also expect to execute on a number of growth initiatives for the combined organization that should further increase shareholder value,” he added. The deal could have come together as a result of high-level personal connections between the two companies.