Wendy's International (WEN)

tbolioli (96.14) Submitted: 8/28/07 6:14 PM : Start Price: $32.64 WEN Score: -14.77

Peltz, the head of the parent company that owns Arby's played Wendy's management like fools and continues to do so. Note to all you wannabe management gurus who think that the MBA you likely cheated to get makes you qualified to run a company: When the head of your competition tells you something, do not believe it!
Peltz, who holds 10% of WEN, tells them to unload the profitable and potential growth unit THI along with baja fresh in order to boost the stock price and they go and do it! What this guy did is used the canard of Baja Fresh to justify shedding it and THI, on the guise that since he is a shareholder, he has financial interest to see the stock rise. Which did exactly the opposite of the stated goal, but exactly what Peltz needed it to do. Once that happened, he lays down an offer for the carcass.
But you ask, why would he let the stock price fall that much? Because, he probably did not buy his share @ the high of $67 (WEN was about half of that a few years back) first off. Second, erasing gains on a 200 million investment (assuming he paid 1/2 of the $67 high) is nothing if you can parlay that into a deeply discounted (to the tune of 50% of 5+ billion dollars) purchase of a long time rival and good compliment to your own restaurant chain. All of which puts your company in a better position to cut supply-line and management costs on the two chains in order to better compete against the bigger rivals of BKC and MCD... Even if he does not buy it, he just got a court ordered peak @ the corporate family jewels. Yeah, this was a no brainer. It was so easy a caveman could do it.
If anyone wants more evidence that listening to your competition is freakin' stupid should reference what Tony George (Indy Car) did to US open wheel racing on the "advice" of Bill France Jr. (NASCAR).

Report this Post Replies: 0 | Reply