As part of some work on Activist Strategy database buildout, featuring Pershing Square and its activist performance, here's a look at their involvement in Wendy's. Ackman and Nelson Peltz have more in common than just their love for candy (i.e. Cadbury and Mondelez).
Pershing Square started purchasing the stock of Wendy’s in December 2004 and by June 2005, had accumulated a 9.9% stake in Wendy’s, including shares of common stock and options. Pershing Square believed that Wendy’s stock was undervalued at the time and suggested certain strategic initiatives to increase shareholder value.
Specifically, Pershing Square proposed that the company (1) spin off Wendy’s Canadian-based Tim Hortons division, (2) re-franchise a significant portion of Wendy’s company-operated restaurants, and (3) repurchase shares using the proceeds from re-franchising. Pershing Square also retained The Blackstone Group L.P. (which we refer to as Blackstone) as its financial advisor to evaluate these strategic initiatives, and Blackstone arrived at similar conclusions as Pershing Square regarding the substantial unrealized value in Wendy’s stock.
Wendy’s eventually spun off the Tim Hortons division through an initial public offering in March 2006, raising approximately $670 million, which was returned to Wendy’s shareholders through share repurchases and higher dividends. The value of Wendy’s stock (including the value of the spun-off Tim Hortons) nearly doubled during the course of Pershing Square’s involvement with the company.
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