bloggingbuyouts

When you look at the work of 13-D wielding activist investors, you usually find the following demands repeating themselves over and over:

• Try to sell the company to a private equity firm or strategic buyer.
• Buy back stock and/or pay a dividend.
• Get rid of the current management and/or board of directors.

The frequency of these requests has given many activists a reputation -- in my opinion largely undeserved -- as short-term oriented paper shufflers looking to pump up the stock price and move on.

Then there's Nelson Peltz, who focuses on that governance-oriented stuff too but is also unique in that he makes very specific comments about marketing: Wendy's isn't playing up its freshness in its advertising, Heinz's ketchup packets weren't good, Tiffany's was too focused on gifts, etc. This fascinating piece in Fortune looks at the investment methodology of this restaurant and branding expert.

Unfortunately, Mr. Peltz's publicly-traded company, Triarc (NYSE: TRY), has been a poor performer of late. But if you're sold on his ideas, it just might be a good time to take a look.

The stock of Wendy's International Inc. (NYSE: WEN) was looking pretty poor yesterday morning. The proposed buyout from Triarc Companies Inc. (NYSE: TRY), the investment arm of billionaire Norman Peltz, at the time valued Wendy's at a mere $26.775 a share in a deal that would marry the Arby's and Wendy's brands. Shares even traded down under $25 because of the discounting.

But today's action -- the stock is up over $27.50, a 4% gain -- is looking like a story of "Good News, Bad News, Good News" for investors. This was a huge score for Mr. Peltz and Triarc. The bad news is that Wendy's board of directors folded like the proverbial cheap suit, particularly for shareholders who have been buried since $30 to $40. But the other good news is that if you believe in Nelson Peltz & Friends, you are getting this as an all stock exchange and therefore you are getting to participate in the upside if they get this ship turned around.

I really expected the board of directors to hold out for $30 (you can read the full op-ed piece from right when the deal was announced). If Peltz would have gotten the Trian Acquisition I Corp. (AMEX: TUX) special purpose acquisition company (SPAC) involved, that $30 level could have probably been reached.

One thing that may also be helping shares today is a Goldman Sachs' analyst upgrade, although that was from a "Sell" to a "Neutral" so it shouldn't be anything to get excited about.

Shares of Wendy's are now up 4% at $27.50 and Triarc Companies Inc. (NYSE: TRY) are at $6.66, a nearly 3% gain from yesterday's close. At $6.66 and based on a 4.25 share conversion offer, that would value Wendy's at $28.305 as an end-game pricing. Wall Street is voting positively for Triarc so far, particularly as its shares had been under-performing by so much.

Jon Ogg is an editor and producer of the "Special Situation Investing" newsletter for 247WallSt.com.

Nelson Peltz isn't too happy with Wendy's (NYSE: WEN), which quickly rejected two of his bids for the company, including a plan to combine Wendy's with Arby's, a fast-food chain owned by Triarc (NYSE: TRY), a company chaired by Mr. Peltz.

Normally I'm pretty sympathetic to the campaigns of activist investors but Peltz has a pretty poor record on corporate governance. During his proxy fight with Heinz back in 2006, the company responded to his calls for change with this: "Triarc received a corporate governance rating of 21.5, exceeding only 21.5% of all companies in the S&P SmallCap 600 and ranking it in the bottom quartile. Separately, Corporate Library gave Triarc an "F" on overall board effectiveness – the lowest possible rating."

So it appears that Peltz may not be walking corporate governance talk. But then again, Wendy's has also been a prodigious destroyer of shareholder value of late, so this is kind of like trying to decide between leaving the kids with Britney or K-Fed.

Wendy's International Inc. (NYSE: WEN) looks like it is about to have activists coming right up under its floors. Trian, Triarc Companies (NYSE: TRY), Nelson Peltz, Peter May, and others have all sent a letter according to an SEC Filing.

The activist group saw two separate proposals rejected within 24-hours, and it looks like the group is going to go after shareholders directly to garner up support. Wendy's is set to report earnings on April 25, and the activists have essentially said "don't do anything before that date."

What is interesting about this activist situation is that the valuations in the past were ugly and no one would have been able to "make shinola out of you know what" with where the stock was trading. It almost had a phantom premium associated with it merely because of activists and merely because it was "troubled" and in need of being fixed. But a serious pullback in a stock changes things.

So far, the board has been able to rebuff all outside efforts. There are many provisions the company has to defend itself, but things might be heating up quite a bit here.

Continue reading more detailed analysis at 247WallSt.com.

Nelson Peltz's Triarc has acquired a 14% stake in Cheesecake Factory (NASDAQ: CAKE), sending shares of the dining chain up 10% on Wednesday.

The company said that it "has had a preliminary conversation with Triarc already, and looks forward to continuing that dialogue."

According to the The Wall Street Journal [subscription], "Mr. Peltz has bought stakes in several other restaurant and food companies, including Wendy's International Inc.(NYSE: WEN) and H.J. Heinz Co (NYSE: HNZ). At those companies, he has pressed directors and executives to sell brands, increase marketing or otherwise change their strategies in an effort to raise their stock prices. Mr. Peltz has said he prefers to work with existing management to effect change, though in the past his involvement has prompted reshuffling of company management and boards."

Cheesecake Factory has struggled to provide investors with strong returns over the past few years, and was scraping a multi-year low before the Petlz announcement sent the stock up. As recently as January, there were rumors that Cheesecake Factory would be taken private at a big premium. At the time, I wrote that "If the Cheesecake Factory Inc. is taken private at a substantial premium to its current market cap of $2.1 billion, it will be looked at as a symbol of LBO-madness in the years to come."

Since then, Mr. Market has lopped $400 million off the stock's market value as the company has been unable to duplicate the strong growth it once enjoyed. But Cheesecake Factory still has a very strong brand an exceptionally good numbers -- and with 125 or so restaurants in operation, there could be ample room for growth.

It might be time for bargain hunters to look anew at this once-hot growth darling.

Chalk up another victim of the evaporation of cheap credit. Yesterday Nelson Pelz's Triarc Co., the front runner in the race to buy Wendy's International (NYSE: WEN), announced it had offered $37-$41 per share, well below the price it was prepared to pay last summer when its interest was first revealed.

Another factor suppressing the price is word in The Wall Street Journal (subscription required) earlier this week that another suitor, William Foley, along with several investment funds, had decided to pass on the opportunity. This leaves only one known competitor for the company, David Karam's Cedar Enterprises, which owns 134 Wendy's restaurants.

Apparently, Pelz was not enthralled by the company's slightly better than expected third quarter, or perhaps he took to heart Wendy's CEO Kerrii Anderson's concern that the "headwinds" of rising commodity prices could hamper the company's ongoing cost reduction initiative.

After a burst of market enthusiasm over the sale possibility drove Wendy's stock as high as 42.22 this summer, it has dropped again to the doldrums of the low $30's. It fell further on today's news.