DUBLIN Ohio Wendy’s International Inc. said late Wednesday it has formed a special committee of independent directors to “review strategic options,” including a possible sale of the company.
The committee, chaired by corporate chairman James V. Pickett, will explore all options for the parent of the No. 3 burger chain, including “changes to its capital structure, a possible sale, merger or other business combination,” Wendy’s said in a statement.
Wendy’s market capitalization is about $3.2 billion.
Talk of Wendy’s as a possible buyout candidate could be heard during the company's attempt at a turnaround since at least last year, and speculation within the analyst community has focused on billionaire and activist investor Nelson Peltz, who holds a 4.4-percent stake in the company. In 2005 and 2006, Peltz orchestrated Wendy’s divesture of its Tim Hortons and Baja Fresh Mexican Grill chains. He also pushed for increased amounts of returned capital to shareholders and nominated three executives to Wendy’s board who currently are still serving. In return for concessions, Peltz entered into a standstill agreement with the company, agreeing not to take further action.
Some analysts have predicted that the expiration of the standstill agreement in June will prompt Peltz to push for a sale of the company, or a merger with the Arby’s system. Peltz is chairman of Arby’s parent company, Triarc Cos., which just this week announced a sale of its other holding, investment advisory firm Deerfield & Company LLC, for about $290 million.
Wendy’s has said it does not comment on market speculation and said in its statement that it would not provide updates, unless warranted, on the special committee’s progress. It also said no time line was in place and that the formation of the committee does not guarantee a transaction will occur. The company is scheduled to hold its annual shareholder meeting Thursday.
Also on Wednesday, Wendy’s reported first-quarter net income of $14.9 million, or 15 cents per share, compared with year-earlier profit of $51.2 million, or 45 cents per share, which included the results of Tim Hortons and Baja Fresh. The company’s income from continuing operations, which excludes the divested chains, was $14.5 million, or 15 cents per share, versus a loss of $5.9 million, or 5 cents per share, in the year-ago first quarter.
Total revenues rose 2 percent in the latest quarter to $590.2 million. Same-store sales increased 3.8 percent at U.S. corporate restaurants and 3.7 percent at domestic franchised restaurants.
Its stock price jumped more than 14 percent in after-hours trading to more than $37 on news of the deal. It had closed the day at $32.68 prior to the company’s announcement.
For roughtly the past year, Wendy’s has been executing a turnaround plan for its namesake 3,660-plus chain, which has included the closing of underperforming locations, reductions to corporate costs and the development of a robust pipeline of new products to spark sales. Same-store sales have been positive for the past 10 months but were previously stagnant.