Log out

April 27, 2007
Buy! Because Others Might

Having already been infiltrated by Peltz and company, and after divesting its only high growth asset last year in Tim’s, it has been obvious for some time that Wendy’s was amidst a period of substantial change.  What is less obvious is why WEN shares shot up by nearly 20% yesterday (intraday) when the company announced it would consider putting itself up for sale. Less than 3-months into the ‘Quality Driven’ turnaround mapped out by management in February, apparently everyone believed Peltz - who controls 8.3% of the stock and three seats - was settled in for a long-term stretch in the common – one of the most uncommon things Mr. Peltz does…

There is a sense of urgency behind Wendy’s ‘strategic alternatives’-like announcement yesterday. Indeed, when Standard and Poor’s downgraded the stock earlier this month they noted that same store sales would face unfavorable comparisons later this year, perhaps dimming any takeover lights. Moreover, there is the fact that at the end of June Peltz will no longer be obligated to not try and take the company over.  In short, the only question is whether or not management made the announcement to try and boost the company’s stock price and thwart future movements by Peltz (unlikely), or if Peltz is readying to purchase WEN outright (the consensus).

Howard Penney, an analyst with Prudential Equity Group, said it best yesterday: “Given that we believe that the stock is expensive and ahead of the fundamentals, the company's influential shareholder base only has one out of their position -- sell the company.”

Expensive or not, Mr. Penney also provided another sign that the worldwide takeover wave has pushed beyond that of healthy speculation and into the realm of a mania when he upgraded the stock.



Members HomeArchives