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Wendy's facing pressure to sell

DUBLIN Ohio Wendy's International Inc. is facing pressure from its largest institutional shareholder to sell its business to the highest bidder and perhaps to search for a new chief executive, according to a report today in the Wall Street Journal.

Boston-based Highfields Capital Management LP, which holds an 8.5 percent stake in Wendy's, reportedly sent a letter this week to Wendy's chairman James Pickett and other directors, pushing the restaurant company to aggressively search for buyers now during Wendy's "operational upside."

"We strongly believe that an auction to the highest bidder is the best way for the current board and management to maximize the value of the business," the Journal quoted the letter as saying. "Let the shareholders get paid for the operational upside that clearly exists but cannot be delivered by current management and provide the franchisees with the marketing and cost support they deserve."

Wendy's announced last month that it had begun to explore strategic alternatives for the company, including a possible sale, merger, or changes to its strategic plan or its capital structure.

The Highfields letter was not filed with federal securities regulators and the company did not return calls seeking comment by press time.

Wendy's spokesman Denny Lynch said the company's board of directors has stated that they are not planning to provide updates on the progress of its strategic review "until warranted."

The Journal report also said Highfields' letter criticized the hiring of Wendy's former chief financial officer Kerrii B. Anderson as Wendy's chief executive, a move that was applauded initially by many on the Street.

"Hiring the CFO of the prior regime as CEO was a mistake, and we and many others told you so when you consulted us," the Journal quoted the letter as saying. "While Kerrii is a fine person and competent financially, what Wendy's needs is an experienced restaurant operator who also understands consumer branding."

Anderson has been initiating a turnaround at the 6,600-unit-plus Wendy's focused on new menu items, increased marketing and unit-level cost cutting. The changes have helped to boost Wendy's same-store sales to positive territory of late, but some analysts contend that two-year trends are still negative and that Anderson's plan is too optimistic and just not enough to successfully turn around the chain. Whether Wendy's can post strong same-store sales during the second half of this year, when it faces tough comparisons to last year, is the question many analysts have been asking.

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