Wendy's, Peltz Edge Closer to Deal

Wendy's
Wendy's

Wendy's International said Tuesday it reached a deal with billionaire investor Nelson Peltz to give his companies access to Wendy's books as they consider making an offer to buy the No. 3 hamburger chain.

Wendy's shares were up 3.5 percent in early afternoon trade. Triarc, the restaurant company led by Peltz, and Wendy's have been in negotiations for months about the rules governing the hamburger chain's auction.

Peltz has said Triarc, parent company of the Arby's fast-food chain, could offer up to $41 per share for Wendy's.

The entities entered into a confidentiality agreement Monday, according to a filing with the U.S. Securities and Exchange Commission. Triarc and Trian Fund Management, also controlled by Peltz, agreed to restrictions that limit their ability to buy Wendy's shares as they review Wendy's finances.

Peltz's Trian Fund Management has a 9.8 percent stake in Wendy's, according to the filing.

In June, Wendy's said it would explore the sale of the company instead of other restructuring options. A special committee of Wendy's board of directors is also weighing making changes to the company's capital structure or revisions to its strategic plan.

Last year, pressure from Peltz accelerated Wendy's spin-off of its Tim Hortons Inc coffee and doughnut chain and led to the sale of its struggling Baja Fresh unit.

Wendy's continues to struggle with weak sales at its flagship restaurants and in June cut its 2007 earnings forecast.

Last week, Wendy's announced plans to serve breakfast at nearly 750 of its restaurants in the United States and Canada by the end of the current quarter. The breakfast menu is a key initiative in Wendy's plan to boost sales and revitalize its business.

Shares of Wendy's were up $1.12, or 3.5 percent, at $33.11 on the New York Stock Exchange. The stock hit a high of $33.48 earlier in the session. Meanwhile, Triarc shares were down 43 cents, or 2.9 percent, at $14.64.

Wendy's shares trade at about 22 times analysts' average earnings estimate for next year, compared with an average multiple of 17.5 for companies in the Dow Jones U.S. restaurants and bars index.