Bettor's Guide to Buyouts

6-to-1 Odds

Wendy's (WEN Quote). Market cap: $6.4 billion.

Wendy's is being bullied by activist hedge funds that say the fast-food chain is an "inefficient holding company." The latest and loudest complaints come from billionaire investor Nelson Peltz. His investment vehicle, Trian Fund Management, is calling for Wendy's to spin off its Tim Horton's, Baja Fresh Mexican Grill, Cafe Express and Pasta Pomodoro brands.

Earlier this year, hedge fund Pershing Square Capital put similar pressure on the company, forcing it to sell part of its Tim Hortons doughnut chain and authorize a $1 billion share buyback. Subsequently, its stock jumped 12% to an all-time high on July 29.

Trian says that didn't go far enough and says Wendy's continues to "perpetuate a highly inefficient and costly conglomerate structure." Such talk quickens the pulse of many a buyout arbitrager.

8-to-1 Odds

Limited Brands (LTD Quote). Market cap: $9.1 billion.

Limited Brands has a long history of selling off retailing chains that eventually go public and achieve success on their own, from Abercrombie & Fitch (ANF Quote) to New York & Co. (NWY Quote).

Now, its Limited Stores and Express chain are flailing, and the company's longtime CEO, Leslie Wexner, could be looking for financial buyers for those businesses. If he fails to shear off the company's dead weight in favor of stellar performances by its crown jewels -- Victoria's Secret and Bath & Body Works -- a private equity firm could be tempted to do it for him.

10-to-1 Odds

J.C. Penney (JCP Quote). Market cap: $13.6 billion.

J.C. Penney achieved a stunning turnaround last year under the leadership of its former CEO, Alan Questrom, but that hasn't exempted it from buyout rumors. The department store chain boasts off-mall real estate assets, and while its financial position has come a long way recently, analysts say its competitive position is still precarious over the long run.