Peltz asks Wendy's to allow evaluation of a purchase

DUBLIN Ohio Nelson Peltz has accused Wendy's International Inc. of attempting to thwart his Triarc Cos. from buying the fast-food giant for at least a year, prompting him to alert Wendy's that he views it as a logical acquisition for his Arby's business.

He asked the company to invite Triarc, the parent of Arby's, into the due diligence process, but also noted that the holding is already considering whether or not to pursue that friendlier route. His statements, contained in a letter sent today to Wendy's chairman Jim Pickett, seemed to raise the possibility of a hostile takeover attempt.

"The lack of response from Wendy's and its advisors and the feedback we are hearing from the market clearly indicates that Wendy's would prefer to sell itself to anyone other than Triarc," wrote Peltz, who controls the company in collaboration with several longtime business associates. "We believe that Triarc is a natural, strategic buyer for the company and should be encouraged to participate in the process."

A special committee of Wendy's directors, formed to consider a sale or other financial alternative for the company, declined to comment on the matter. "As we have said before, the special committee will comment when it believes comment is appropriate," it said in a statement.

According to a securities filing by Triarc and a Peltz affiliate called Trian Fund Management L.P., Triarc had been invited by JP Morgan, one of Wendy's two financial advisors, on June 19 to investigate a purchase of the company. Morgan forwarded a confidentiality agreement as a prelude to releasing confidential information about Wendy's to those and affiliated parties.  "The confidentiality agreement contained a restrictive one-year standstill clause to which Triarc has objected," the filing said.

In his letter to Pickett, Peltz characterized the response to the one-year delay of a possible deal as a "strong objection." The investor said he was writing it in his dual capacities as chief executive of Trian  and chairman of Triarc.

"Triarc is considering whether it will participate in the company's process and therefore requests your confirmation that it will be provided access to the terms of the staple financing being offered by your financial advisors," Peltz wrote. He was apparently referring to Wendy's recent announcement that it might seek a securitization to help a buyer fund the transaction.

"Jim, neither Triarc, nor Trian, is making an offer or proposal in this letter," Peltz said in conclusion. "Rather, we are evaluating our alternatives…"

Triarc or one of Peltz's other investment arms have been cited as likely bidders for Wendy's since the company disclosed several months ago that it planned to consider a deal or other ways of boosting the value of its stock. On June 18, Wendy's indicated that it would explore a sale, without abandoning other strategic alternatives.

David Palmer, the restaurant analyst for UBS Securities, contended that Peltz and his affiliates might be more interested in raising the value of their Wendy's holdings than in acquiring the company. The letter, he wrote in a report issued today, shows "increasing impatience with Wendy’s review of a sale of the company, in our view. Importantly, 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—rather than a Triarc purchase of Wendy’s—due to the activists’ continuous agenda to drive the stock higher over the past two years.”

In today's filing, Trian said it had increased its stake in Wendy's to 9.8 percent of shares outstanding.

In its June 18 statement about the possibility of a sale, Wendy's lowered its projection for 2007 earnings before interest, taxes, depreciation and amortization, or EBITDA , to between $295 million and $315 million. Earlier, it had forecast EBITDA as $330 million to $340 million.  EBITDA is a the gauge that would-be buyers typically using in determining a company's worth.