CALABASAS HILLS Calif. Shares in The Cheesecake Factory Inc. soared in price on Wednesday following news that activist investor Nelson Peltz was cleared by the Federal Trade Commission to buy a stake in the casual-dining chain.
Although Peltz’s intentions were not disclosed, Cheesecake said in a statement that executives had already opened a “preliminary dialogue” with the Peltz holding that sought permission to buy the stake, and that the conversation would be ongoing.
The Bloomberg news service quoted an unnamed source as saying Peltz intends to buy as much as 10 percent of Cheesecake’s shares outstanding through his Trian Star Trust. Other observers noted that a securities filing is required for investments totaling 5 percent or more of a company’s stock. There had been no such filings as of presstime.
It was not clear why Peltz would need regulatory approval before buying an interest in the company. Similar approval was granted before he purchased stakes in Wendy’s International Inc. and H.J. Heinz Co.
Peltz, who controls Arby’s parent Triarc Cos. Inc. and recently made a bid for Wendy’s through his holdings, is known for buying a significant stake in public concerns and then pressing for changes in their strategic direction. In addition to the Wendy’s and Heinz, his foodservice targets have included Cracker Barrel parent CBRL Group and Kraft Foods Inc.
Cheesecake, one of casual-dining’s highest-volume concepts, has been stung along with the rest of the segment by sluggish consumer spending and rising costs. Its stock had dipped to a yearly low of $21.22 per share before news of Peltz’s interest sparked a rise in the price.