Spurned suitor Trian demands Wendy's call a special shareholder meeting

DUBLIN Ohio Trian Fund Management LP, after Thursday being rejected in two recent efforts to acquire Wendy’s International Inc., is calling on the fast-food company to hold a special meeting of its shareholders to decide the company’s future.

In a letter filed today with the regulators and sent to Wendy’s chairman James Pickett, Peter W. May, president of Trian and vice chairman of Triarc Cos. Inc., an entity controlled by Trian and the franchisor of the 3,000-unit Arby’s chain, said Trian was “very concerned about the current direction of Wendy’s.”

The letter said Wendy’s special committee, which was formed a year ago to explore strategic alternatives for the company, had rejected in less than 24 hours two acquisition proposals made by Trian and Triarc. Both Trian and Triarc are headed by activist investor Nelson Peltz, who currently owns 8.6 million Wendy’s shares, or 9.8 percent of the company.

Wendy’s responded to Trian’s letter later Friday afternoon, calling its statements misleading to Wendy’s shareholders.

“Every proposal received by the special committee has been given fair and proper 1 consideration,” chairman Pickett said. “The timing of the rejection of your latest proposals is attributable to their inadequacy and to our strong belief that our shareholders need to have the special committee process concluded.”

Pickett said Trian’s proposal to merge Arby’s and Wendy’s included a valuation of Wendy’s “significantly below a level” that Wendy’s deemed unacceptable. Pickett also said that Trian’s claims that it would not need third-party financing was also misleading because the deals would be contingent on the cash from the recently formed special acquisition company, Train I Acquisition Corp.

“The special committee expects to have further announcements regarding the recommendation of its strategic review in the very near future,” Pickett said. 

Trian outlined that one proposal, according to the letter, would have combined Wendy’s and Arby’s, and the other involved an acquisition of 100 percent of Wendy’s for more than $900 million in cash and additional stock. Peltz had been willing to offer as much as $3.6 billion for the No. 3 burger chain, which includes about 6,600 units, prior to the crippling of the credit markets and Wendy’s deteriorating performance. That offer was first made last July and then was reduced to an undisclosed amount last November.

“If [Wendy’s] special committee now intends to pursue a transaction with another party, such as the sale of a minority equity interest, we urge the board to ensure that any alternative transaction be subject to the approval of Wendy’s shareholders and not just the members of the special committee,” May wrote. “If shareholders approve a different transaction after having been afforded the opportunity to consider the benefits of the transactions we had proposed, Trian will abide by the will of its fellow shareholders.”

Trian’s call for a special meeting is the latest move by Peltz in his attempt to take control of Wendy’s. Two months ago, Trian proposed expanding Wendy’s board to 15 members and nominating six new directors. Three directors connected to Peltz were elected to the board in 2006. He has been agitating for change at Wendy’s since 2005, including the spinoff of Tim Hortons and the sale of other non-core brands like Baja Fresh.

Wendy’s has said it plans to announce first-quarter results April 25, and it has yet to schedule an annual shareholder meeting that typically takes place in the spring. Last week it reported drops in same-store sales for the first quarter ended March 30, of 0.1 percent at domestic franchised restaurants and 1.6 percent at corporate ones.

Wendy’s shares fell 9 cents during trading Friday morning to $25.01, just above its 52-week low of $22.18. The stock has rebounded a bit to $25.22 in the afternoon. Wendy’s shares reached as high as $42.22 last summer, just after the special committee was formed to review strategic alternatives, including a sale of the company, in April of last year.