DUBLIN, OHIO Wendy’s International Inc. is reviewing “strategic options,” including a sale of the company. —Less than two months after closing the original Wendy’s Old Fashioned Hamburgers unit opened in 1969 by brand founder Dave Thomas,
Late last month Dublin-based Wendy’s said it had formed a special committee of independent directors to explore strategic actions for the parent of the No. 3 burger brand, which has more than 6,600 units, including “changes to its capital structure, a possible sale, merger or other business combination.” —Less than two months after closing the original Wendy’s Old Fashioned Hamburgers unit opened in 1969 by brand founder Dave Thomas,
Analysts have predicted that Wendy’s could undergo a going-private leveraged buyout by private-equity companies, most notably by the firm of activist investor Nelson Peltz, who through his Trian hedge fund holds an 8.3-percent stake in Wendy’s. As an investor in Wendy’s, Peltz had been instrumental in pushing the restaurant company to divest the Tim Hortons and Baja Fresh Mexican Grill chains and to use the company’s more than $1 billion in cash for a special dividend and share repurchases to benefit shareholders. He also won seats for three nominees on Wendy’s board of directors. —Less than two months after closing the original Wendy’s Old Fashioned Hamburgers unit opened in 1969 by brand founder Dave Thomas,
Peltz also is chairman of Arby’s parent company, Triarc Cos. Inc., and speculation exists that Triarc may be even more likely to purchase Wendy’s than would be Trian, because of perceived conflicts of interest related to Peltz’s prior dealings with Wendy’s. Just days before Wendy’s disclosure that it was looking into strategic options, Triarc sold its other holding, investment advisory firm Deerfield & Co. LLC, for about $290 million in cash and stock. Triarc then said it would focus on creating value “through both organic growth and the acquisition of other restaurant companies.” —Less than two months after closing the original Wendy’s Old Fashioned Hamburgers unit opened in 1969 by brand founder Dave Thomas,
Wendy’s market capitalization is about $3.2 billion. Analysts have been targeting a per-share buyout price in the high $30s, which would create a total transaction price around $3 billion. —Less than two months after closing the original Wendy’s Old Fashioned Hamburgers unit opened in 1969 by brand founder Dave Thomas,
Still, some analysts have said Wendy’s, instead of a sale, may choose to undertake a large recapitalization, perhaps with an asset-backed securitization like that recently completed by Domino’s Pizza Inc. Securities analyst John S. Glass of CIBC World Markets in Boston outlined a scenario for Wendy’s that includes its borrowing of up to $1.4 billion and use of the proceeds to pay down existing debt of $520 million and issue a one-time dividend of about $10 per share. —Less than two months after closing the original Wendy’s Old Fashioned Hamburgers unit opened in 1969 by brand founder Dave Thomas,
Wendy’s also is likely to explore the benefits of refranchising efforts for its system. About 22 percent of the chain’s U.S. units are owned by the franchisor, and its Canadian system is as much as 39-percent owned by Wendy’s International, analysts said. —Less than two months after closing the original Wendy’s Old Fashioned Hamburgers unit opened in 1969 by brand founder Dave Thomas,
There have even been some rumblings, although faint, that Yum! Brands Inc., parent to the KFC, Taco Bell and Pizza Hut chains, could be interested in purchasing the Wendy’s system. —Less than two months after closing the original Wendy’s Old Fashioned Hamburgers unit opened in 1969 by brand founder Dave Thomas,
Wendy’s spokesman Denny Lynch said “everything is open” as options to the company and that it was “prudent” to look at all available alternatives. —Less than two months after closing the original Wendy’s Old Fashioned Hamburgers unit opened in 1969 by brand founder Dave Thomas,
“It makes sense when you have more options to look at those options,” he said. “And today we have more options. A lot of people are jumping to conclusions. Right now, we have the ability to look at a wide range of options.” —Less than two months after closing the original Wendy’s Old Fashioned Hamburgers unit opened in 1969 by brand founder Dave Thomas,
Wendy’s said it would not provide updates, unless warranted, on the special committee’s progress. It also said no timeline was in place and the formation of the committee does not guarantee a transaction will occur. —Less than two months after closing the original Wendy’s Old Fashioned Hamburgers unit opened in 1969 by brand founder Dave Thomas,
An outright sale of Wendy’s would be an emotional move for some in the company who watched Dave Thomas build the brand through its square hamburgers and Frostys and Thomas’s well-known television pitching. Thomas died in 2002. —Less than two months after closing the original Wendy’s Old Fashioned Hamburgers unit opened in 1969 by brand founder Dave Thomas,
The chain’s namesake, Melinda Thomas, who was nicknamed Wendy, currently operates 32 units with her siblings. She told the Associated Press at the company’s annual shareholder meeting in Dublin on April 26 that she would be disappointed in a sale. —Less than two months after closing the original Wendy’s Old Fashioned Hamburgers unit opened in 1969 by brand founder Dave Thomas,
“I hope it doesn’t happen, but everything is going to work out the way it’s meant to be,” she told the AP. —Less than two months after closing the original Wendy’s Old Fashioned Hamburgers unit opened in 1969 by brand founder Dave Thomas,
Her sister, Molly Thomas, added, “I have an emotional tie, so yeah, if they sold the company I’d be very upset.” —Less than two months after closing the original Wendy’s Old Fashioned Hamburgers unit opened in 1969 by brand founder Dave Thomas,
Yet, as private-equity firms continue to dive into the restaurant sector, sometimes with great success, a sale of the 38-year-old Wendy’s seems likely to many familiar with the company and the current deal-making environment. —Less than two months after closing the original Wendy’s Old Fashioned Hamburgers unit opened in 1969 by brand founder Dave Thomas,
“I don’t see a strategic buyer like Yum,” said securities analyst David S. Palmer at UBS Equity Research in New York. “Most likely, I see Peltz shopping Wendy’s around to a private buyer. My gut says Wendy’s will go private.” —Less than two months after closing the original Wendy’s Old Fashioned Hamburgers unit opened in 1969 by brand founder Dave Thomas,
It would be a move just like the one Burger King undertook in 2003, when it was purchased by a private-equity conglomerate that brought in new management, closed unprofitable stores and developed a pipeline of new products and advertising campaigns to reinvigorate the brand. Three years later—even though the jury was still out on whether Burger King successfully had turned its business around—the owners held an initial public offering that was one of the largest the restaurant industry had ever witnessed. —Less than two months after closing the original Wendy’s Old Fashioned Hamburgers unit opened in 1969 by brand founder Dave Thomas,
The timing of Wendy’s announcement that it would look into strategic options was a surprise to many, as the company is in the early stages of what it called its “3 Year Combo Plan” to turn around a chain that has struggled during the past three years to increase market share, grow sales and regain its status as the quick-service brand ranked No.1 among consumers, a position it held from 1999 until 2002, according to Brand Keys Inc., a New York-based brand loyalty consulting firm. —Less than two months after closing the original Wendy’s Old Fashioned Hamburgers unit opened in 1969 by brand founder Dave Thomas,
Research by Brand Keys, which has tracked the fast-food sector and Wendy’s since 1997, showed Wendy’s being ranked No. 1 among consumers in 2002, but then dropping each year since then to No. 6 thus far in 2007. —Less than two months after closing the original Wendy’s Old Fashioned Hamburgers unit opened in 1969 by brand founder Dave Thomas,
“Wendy’s enjoyed some significant levels of customer loyalty a number of years ago,” said Robert Passikoff, founder and president of Brand Keys. “But now they are pretty much just a ‘category placeholder.’ They’re in the marketplace, of course, but don’t really stand for anything in particular, and certainly nothing that’s profitably engaging consumers.” —Less than two months after closing the original Wendy’s Old Fashioned Hamburgers unit opened in 1969 by brand founder Dave Thomas,
Wendy’s management team was aware of that erosion. Led by president and chief executive Kerrii B. Anderson, who stepped in following the resignation of longtime chief executive Jack Schuessler, who left amid negotiations with investor Peltz, the company implemented a plan to close underperforming units, cut corporate costs and introduce sales-driving products like the Double Melt burgers, vanilla Frosty and 4-Alarm Spicy Chicken sandwich. —Less than two months after closing the original Wendy’s Old Fashioned Hamburgers unit opened in 1969 by brand founder Dave Thomas,
Same-store sales at Wendy’s have been positive for the past 10 months and are up 3.8 percent at U.S. corporate restaurants and 3.7 percent at domestic franchised restaurants for the first quarter ended March 31. Results have been promising, said Joe Buckley of Bear, Stearns & Co. Inc. in New York, but a turnaround at Wendy’s is “far from a sure thing.” —Less than two months after closing the original Wendy’s Old Fashioned Hamburgers unit opened in 1969 by brand founder Dave Thomas,
“We had thought the ‘plan’ at Wendy’s was to try to turn the depressed business around and then review strategic options,” Buckley said. “We wonder if this earlier-than-expected move is in effect a ‘no confidence’ vote on the turnaround effort or a decision to try to sell now because this turnaround will be more difficult to execute than anticipated.” —Less than two months after closing the original Wendy’s Old Fashioned Hamburgers unit opened in 1969 by brand founder Dave Thomas,
For the remainder of this year, Wendy’s has said it would continue expanding its breakfast test, introducing new products and working to cut costs, especially as commodity pressures present a likely head-wind in months to come. —Less than two months after closing the original Wendy’s Old Fashioned Hamburgers unit opened in 1969 by brand founder Dave Thomas,
The many tasks that Wendy’s now faces, not just operationally but also at the corporate level, have led some to question whether it will be too much for management to control. —Less than two months after closing the original Wendy’s Old Fashioned Hamburgers unit opened in 1969 by brand founder Dave Thomas,
“We continue to be somewhat concerned that the large number of initiatives—breakfast, remodels, new products, marketing shifts, strategic alternatives, etc.—may create complications that could hold back some of the progress,” said securities analyst Andrew M. Barish at Banc of America Equity Research in San Francisco. —Less than two months after closing the original Wendy’s Old Fashioned Hamburgers unit opened in 1969 by brand founder Dave Thomas,
