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Peltz Seen as Pushing Wendy's Sale

Analysts say the shareholder is most likely the reason the fast-food chain is exploring options.
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shares sizzled Thursday after the burger chain said it might put itself up for sale -- a move that analysts believe is being driven by billionaire shareholder Nelson Peltz.

Shares of the Dublin, Ohio-based company jumped $5.31, or 16%, to $37.99 on the day.

Wendy's, the No. 3 burger maker behind


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Burger King


, said after Wednesday's close that it is evaluating such moves as sale, merger, revision to its strategic plan and change to its capital structure.

Wendy's spent the early part of last year battling declining same-store sales and a proxy fight waged by Peltz, who eventually ended up putting his own three nominees on the company's board. Wendy's has since launched a series of moves aimed at revitalizing its restaurants and its stock price.

Analysts say Peltz, whose Trian fund owns about 8% of Wendy's stock, is playing a big role in the company's planning.

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"In the middle of a turnaround, you sure as hell don't want to sell the company," says Malcolm Knapp, president of Malcolm M. Knapp, a New York-based consulting firm. "The management team is focused on the turnaround, and the board obviously has its own internal dynamic, driven largely by Mr. Peltz."

Howard Penney, an analyst with Prudential Equity Group, upgraded Wendy's to neutral weight from underweight on Thursday. He wrote that Wendy's has appreciated 141% since April 18, 2003, and during that time it has sold assets and returned billions of dollars to shareholders.

"So why would management think they need to enhance shareholder value?" Penny wrote. "To get to the real answer as to why now, we must get very cynical and say that senior management is not the one behind this announcement.

"Given that we believe that the stock is expensive and ahead of the fundamentals," Penney continued, "the company's influential shareholder base only has one out of their position -- sell the company."

During a conference call Thursday, CEO Kerrii Anderson said the plan to explore options was in fact a board decision, not a management-related move.

"This management team has to focus on, what I am focused on, is what

we can control," she said.


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already owns the Arby chain, so he conceivably could be a buyer. Howard Davidowitz, chairman of retail consulting and investment banking firm Davidowitz & Associates, believes that Wendy's will be a target for private equity.

Peltz "is an agitator for change, and he makes a fortune," he says. "It's right out of the Carl Icahn playbook."

"We're in a different world today," Davidowitz adds. "In the world I grew up in, management had five-year plans, 10-year plans. Today you've got three minutes. Welcome to the world of private equity. They agitate for change, and they want it now."