Nelson Peltz claims he’s being stonewalled in the auction for fast-food chain Wendy’s even though the billionaire inancier says his Arby’s roast beef sandwich joint is a natural buyer.
Peltz’s hedge fund, Trian Group, owns nearly 10 percent of Wendy’s and has been pressuring the company for almost two years to boost its stock price.
Now that Wendy’s is on the block, the rebel investor wants to examine the books so his other company, Triarc, can make a bid. Triarc, which is publicly traded, controls Arby’s.
In a letter to Wendy’s Chairman Jim Pickett, Peltz said the company hasn’t responded to a request he made last week for details about how much debt financing is being made available to potential buyers.
In order to get the information, Peltz claims he is being forced by Wendy’s advisers at JPMorgan to sign a “standstill agreement” that prevents him from buying more shares or launching a hostile tender offer.
“The lack of response from Wendy’s and its advisers and the feedback we are hearing from the market clearly indicate that Wendy’s would prefer to sell itself to anyone other than Triarc,” Peltz wrote in the letter. He added that Triarc is a “natural strategic buyer for the company.”
“The special committee of the board will provide comments when they feel it’s appropriate,” said a Wendy’s spokesman yesterday.
At issue for Wendy’s is Peltz’s apparent conflict of interest in being both the company’s largest shareholder and a potential buyer who could potentially use his muscle to force an outcome that is undesirable to the company, said one source close to the deal.
UBS analyst David Palmer said Peltz’s letter may just be an attempt to juice the share price instead of a serious attempt to buy.
“We believe Trian is more likely interested in pushing for a competitive bidding process and a timely sale of the company as a liquidity event to sell its shares,” Palmer wrote in a research note.
Peltz has been pressuring Wendy’s to fire up its stock price since he first bought shares in late 2005. This week marked Peltz’s first opportunity to rattle the cages at Wendy’s since he abandoned a proxy fight with management last year after getting three of his associates on the board. His agreement not to make any demands on Wendy’s for a year expired June 30.
Shares of Wendy’s, which has a market value of $3.3 billion, rose 2.7 percent yesterday to $38.39. They have climbed 17 percent since the chain said on April 25 that it might consider a sale.