Wendy's (NYSE: WEN) recently agreed to be acquired by Triarc (NYSE: TRY), parent of Arby's, but that won't stop the company from efforts at innovation before the deal closes.

In a statement, the number three fast food chain announced that it's "introducing a new line of hand-spun Frosty Shakes in three flavors: Vanilla Bean, Chocolate Fudge, and, yes, Strawberry -- a company first."

The company will launch a national ad campaign in June. The Frosty was one of the original Wendy's menu items when Dave Thomas opened the first location in 1969. Since then, the Frosty has become Wendy's best-known item, with annual sales exceeding 350 million.

What can Wendy's do to keep up with the more innovative McDonald's (NYSE: MCD)? Here's an idea: an all-natural Frosty made with real milk.

As Sarah Gilbert recently wrote on WalletPop, our sister site, "Unfortunately, today's milkshake is barely recognizable compared to those of the middle of the century. Most milkshakes consumed by Americans today come from McDonald's, Wendy's or Starbucks; where they are all individually "branded", Shamrock Shake, Frosty, Frappuccino, so that it's clear the milk is but a minor player. Nonfat milk solids, corn syrup solids, guar gum, dextrose, cellulose gum, vanilla. Is this progress?"

An all-natural Frosty could really move Wendy's into the 21st century. They've demonstrated a willingness to introduce new Frosty products, so why not give it a try?

Shares of Starbucks (NASDAQ: SBUX) were up more than 6% on Friday after Nelson Peltz disclosed a stake of less than 1% in the company.

The Wall Street Journal reports (subscription required) that "John Glass, an analyst at Morgan Stanley, said Mr. Peltz could urge Starbucks to cut spending and use more licensing or franchising in opening locations. The money saved from that could go to buying back shares or a larger dividend for shareholders."

Perhaps. He very well could urge Starbucks to do that -- but take a quick look at the chart for the company that Mr. Peltz is chairman of -- Triarc (NYSE: TRY). The stock closed at $6.69 on Friday, after beginning 2007 at more than $20 per share. And how's the corporate governance over there? One company that engaged in a proxy fight with him blasted him with this:

Triarc received a corporate governance rating of 21.5, exceeding only 21.5% of all companies in the S&P SmallCap 600 and ranking it in the bottom quartile. Separately, Corporate Library gave Triarc an 'F' on overall board effectiveness -- the lowest possible rating.

Most likely Peltz's stake is a nonissue and will lead to no changes. I certainly don't buy that it's a rational reason for the stock to add more than half a billion dollars to its market cap in a single day.

Give Triarc (NYSE: TRY) CEO Roland Smith credit for forthrightness. Less than a month after the company announced it would acquire Wendy (NYSE: WEN)'s -- and well before the deal has even closed -- he wrote a letter to the company's employees saying in effect "Welcome to our conglomerate, you're fired!" to borrow a line from Isadore Barmash's book.

Well, not exactly. Triarc -- which is the parent company of Arby's -- isn't a conglomerate, and his letter had a bit more tact. He wrote: "There will be job cuts at Wendy's. I don't know how to put it any other way and say that I am acting with integrity. We will continue to be truthful with you about these as they come up."

It's a bold strategy. Given Wendy's struggles in recent years, he'll need all the help he can get in making this acquisition work, including strong employee morale. While immediate job cuts might help the bottom line, the impact on the company's remaining employees could make it far from a no-brainer.

Smith is betting that straight talk will pay off, but most employees would probably prefer job security. This letter may lead to a less than friendly welcome when Triarc takes control.

Nelson Peltz isn't too happy with Wendy's (NYSE: WEN), which quickly rejected two of his bids for the company, including a plan to combine Wendy's with Arby's, a fast-food chain owned by Triarc (NYSE: TRY), a company chaired by Mr. Peltz.

Normally I'm pretty sympathetic to the campaigns of activist investors, but Peltz has a pretty poor record on corporate governance. During his proxy fight with Heinz back in 2006, the company responded to his calls for change with this: "Triarc received a corporate governance rating of 21.5, exceeding only 21.5% of all companies in the S&P SmallCap 600 and ranking it in the bottom quartile. Separately, Corporate Library gave Triarc an 'F' on overall board effectiveness -- the lowest possible rating."

So it appears that Peltz may not be walking corporate governance talk. But then again, Wendy's has also been a prodigious destroyer of shareholder value of late, so this is kind of like trying to decide between leaving the kids with Britney or K-Fed.

A fund affiliated with restaurant super-investor Nelson Peltz has acquired a 14% stake in Cheesecake Factory (NASDAQ: CAKE), sending shares of the dining chain up 10% on Wednesday.

The company said that it "has had a preliminary conversation with Triarc (Pelz's firm) already, and looks forward to continuing that dialogue."

According (subscription required) to the Wall Street Journal, "Mr. Peltz has bought stakes in several other restaurant and food companies, including Wendy's International Inc.(NYSE: WEN) and H.J. Heinz Co (NYSE: HNZ). At those companies, he has pressed directors and executives to sell brands, increase marketing or otherwise change their strategies in an effort to raise their stock prices. Mr. Peltz has said he prefers to work with existing management to effect change, though in the past his involvement has prompted reshuffling of company management and boards."

Cheesecake Factory has struggled to provide investors with strong returns over the past few years, and was scraping a multi-year low before the Petlz announcement sent the stock up.

Chalk up another victim of the evaporation of cheap credit. Yesterday Nelson Pelz's Triarc Co., the front runner in the move to buy Wendy's International (NYSE: WEN), announced it had offered $37-$41 per share, well below the price it was prepared to pay last summer when its interest was first revealed.

Another factor suppressing the price is word in the Wall Street Journal (subscription required) earlier this week that another suitor, William Foley, along with several investment funds, had decided to pass on the opportunity. This leaves only one known competitor for the company, David Karam's Cedar Enterprises, which owns 134 Wendy's restaurants.

Apparently, Pelz was not enthralled by the company's slightly better than expected third quarter, or perhaps he took to heart Wendy's CEO Kerrii Anderson's concern that the "headwinds" of rising commodity prices could hamper the company's ongoing cost reduction initiative.

After a burst of market enthusiasm over the sale possibility drove Wendy's stock as high as 42.22 this summer, it has dropped again to the doldrums of the low 30's. It fell further on today's news.

Nelson Peltz is offering to buy Wendy's (NYSE:WEN), but no one seems to want to say for how much. According to TheStreet.com,"in a Securities and Exchange Commission filing Tuesday, Triarc (NYSE:TRY) said it submitted an offer Monday to buy all of Wendy's shares, primarily with cash."

Peltz had indicated that he thought Wendy's was worth between $37 and $41 a share when he started talking to the company in July. The shares now trade below $32, so investors should not expect much of a premium.

Douglas A. McIntyre is an editor at 247wallst.com.

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.

Billionaire Nelson Peltz may have thought he had the inside track to buy Wendy's (NYSE: WEN) since his Triarc Group already owns Arby's.

According to The Wall Street Journal, Mr. Peltz will have competition from a group including Thomas H. Lee Partners LP, Oaktree Capital, and First National Financial. The head of First National once ran the Carl's Jr. and Hardee's chains. And, a third group has come to the table, this one backed by Kelso & Co. and Oak Hill Capital Partners.

Unlike several private equity deals that are falling apart because of tight credit markets, the Wendy's deal looks like it may be done at a nice premium for shareholders. Wall Street anticipates that the company could go for $37 to $41 a share. Wendy's stock is under $34.

Why is this deal different from others? Perhaps because the most visible bidders have a great deal of experience in the fast food business. This may give them more confidence that they will know which parts of the company can be improved to yield better cash flow.

That makes Wendy's shareholders more fortunate than those in other companies being pursued for buy-outs.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Billionaire investor Nelson Peltz says his company Triarc (NYSE: TRY) would be be willing to buy Wendy's (NYSE: WEN). In a letter to the chairman of Wendy's also filed with the SEC, Peltz wrote that:

We believe that Triarc is a natural, strategic buyer for the company and should be encouraged to participate in the sale process the Special Committee is conducting. You should be aware that Triarc presently anticipates that it would be prepared to offer consideration in the range of $37.00 to $41.00 per share to Wendy's shareholders. This represents a premium of 10% to 22% over last Friday's closing price for Wendy's stock and a premium of 15% to 28% over the closing price of Wendy's stock on April 24, 2007, the day before the company announced the formation of the Special Committee.

Peltz is unhappy with certain clauses of a confidentiality agreement that Wendy's management wants him to enter into before they begin negotiations on a possible sale.

Shares of Wendy's are up 7.60% on the news after-hours to $36.25, slightly below the lower end of the range that Peltz suggested for his offer.

Arby's, a unit of Triarc Companies (NYSE: TRY), has just taken first prize in its attempt to one-up the "super-size" fast-food menu with its "Pick 5 for 5.95" value meal.

If you've read Eric Buscemi's Battle of the Brands post: McDonald's vs. Burger King, you know the Big Mac and Whopper do not fall in the category of "healthy" foods. Add in fries and a drink and you've already clogged your first artery. But Arby's takes it one step further: they give you your pick of five fast-food items on a special menu -- two more than the standard value meal at McDonald's (NYSE: MCD) or Burger King (NYSE: BKC).

I went to Arby's for lunch today to pick my "5 for 5.95" and I must say it's overwhelming.

I decided upon an Arby's Melt sandwich with medium curly fries, a medium drink (sounds like the standard fast-food value meal so far but I had two more choices) mozzarella sticks with marinara sauce and a small jamocha shake.

Needless to say, I couldn't finish everything. I sat at my table staring at my unfinished meal thinking of Thomas Aquinas and what he said about gluttony in his SUMMA THEOLOGIÆ, "Gluttony denotes, not any desire of eating and drinking, but an inordinate desire ... leaving the order of reason, wherein the good of moral virtue consists."

This was just too much food, I thought. It defies all reason. How bad is this for you?

In addition to Wendy's (NYSE: WEN) management's recent hiring of JP Morgan (NYSE: JPM) and Lehman Brothers (NYSE: LEH) to help review strategic options for the company, the fast-food restaurant has decided to throw its hat into the breakfast ring by signing an exclusive deal with Proctor & Gamble (NYSE: PG). The deal allows Wendy's to be the only major fast-food restaurant chain to offer a proprietary blend of Folgers Gourmet Selections coffee and will become part of Wendy's new breakfast menu.

What's that you say, "Breakfast menu?"

Yes folks, Wendy's just isn't for lunch or dinner anymore (or dessert – mmmm Frosty's). You can now eat Wendy's for every meal of the day. By the end 2007, Wendy's expects to have 20-30% of its North American restaurants serve breakfast along with premium Folgers coffee.

Wendy's is definitely throwing its hat into a very crowded ring. The fast-food breakfast market is growing at almost three times the rate of the overall market, with Burger King (NYSE: BKC), McDonald's (NYSE: MCD), Arby's, a unit of Triarc Co. (NYSE: TRY), Carl's Jr and Hardee's, both owned by CKE Restaurants (NYSE: CKR) and even Starbucks (NASDAQ: SBUX) offering similar on-the-go breakfasts to consumers. Papa John's (NASDAQ: PZZA), Dunkin Donuts and Chick-fil-A are planning new breakfast products as well. What's going to be so different to make me go to Wendy's?

When looking at the coffee aspect, one has to recall last year's Canadian Business magazine taste test between McDonald's "Café Roast" and Starbucks coffees. I'm sure all the companies I mentioned above serve some brand of coffee. Wendy's is really walking into a competitively caffeinated situation. We also can't forget about Seattle 's "Sexpresso" baristas, but that's competition on a different level.

Where do you go to get your morning cup o' joe? And would the chance to have Folgers Gourmet change your mind?