Friday, April 25, 2008

Swallowing up Wendy’s   Triac Companies, led by billionaire Nelson Peltz, announced it would acquire fast food chain Wendy’s for $2.4 billion. Wendy’s is the #3 US hamburger chain, after McDonald’s and Burger King. The purchase is a stock swap, nad is lower than might have been expected. Wendy’s had been seeking suitors, but most private equity firms are not now in a position to pay a premium. Wendy’s has over 6,500 retail outlets, in the US and in 20 other countries, with about 1,400 owned directly by the company, the rest franchises/   Triarc operates the Arby’s chain, fast food restaurants that specialize in roast beef sandwiches. There are about 3,700 stores in the chain, with over a thousand company-owned. Triac has some minority positions in other companies in the food industry as well.   Dave Thomas the founder of Wendy’s (in 1969) and the chief ad spokesperson for the chain, build a highly successful chain. Since 2002, when he died, the company has been slowly declining, as Burger King and McDonald’s have gotten ever more aggressive, in such areas a breakfasts and discount menus. Peltz had already become the largest shareholder in the company, and he exerted a lot of pressure on management to sell out.   The thought is that Triac will drop less profitable Wendy’s stores, and combine some with Arby’s, much as Yum Brands combines Taco Bell and KFC sites.   Obviously , there will be some synergies in terms of purchasing and administration, but these will be pretty scant. Neither Arby’s nor Wendy’s has a very sexy reputation right now, and many are afraid that Arby’s will drag down the image of Wendy’s, which had been somewhat superior to that of other burger chains.   Furthermoew, life is getting difficult for all restaurants now,a s food price skyrocket and disposable income is getting tighter. It’s never easy being #3.   10:33:27 PM

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