Wendy's explores possible sale, revises '07 outlook

by Eric Schroeder
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DUBLIN, OHIO — Wendy’s International, Inc. announced it is considering a possible sale of the company. The decision follows a meeting by a special committee of independent directors who have been charged with reviewing strategic options in an effort to enhance shareholder value.

"The special committee has determined that the exploration of a sale is the appropriate next step in the investigation of value-creating alternatives for our stakeholders," said James V. Pickett, chairman of the board and the special committee. "While a sale remains only one of the alternatives under consideration, we believe it merits more thorough examination. Our goal is to move forward expeditiously and to minimize disruption to the company and its operations. We want management and our operators to focus on executing Wendy’s business plan to grow sales and margins."

Wendy’s said JP Morgan, as lead adviser, and Lehman Brothers Inc., as co-adviser, will conduct the sale exploration process in conjunction with the special committee. There is no specific timetable for the process.

Wendy’s first announced its intent to explore strategic options in late April, when the company said net income for the first quarter of fiscal 2007 fell 71% from the same period a year ago.

In addition to announcing its intent to explore sale options, Wendy’s also revised its outlook for 2007 EBITDA and earnings per share.

The company’s revised range for EBITDA is $295 million to $315 million, which compared with previous guidance of $330 million to $340 million. The company’s revised range for e.p.s. is $1.09 to $1.23 per share, compared with the company’s previous guidance of $1.26 to $1.32 issued on March 20.

"Our strategy to revitalize the Wendy’s brand, improve our bond with customers and generate sustainable same-stores growth is producing positive results," said Kerrii Anderson, chief executive officer and president. "We’ve delivered 12 consecutive months of positive same-store sales through May, but the last two months have been challenging as we’ve aggressively adjusted pricing to bring Wendy’s more in line with the market. We believe our new market-based pricing approach is the right long-term strategy to generate more positive store operating margins, but it has pressured transactions in the short-term. Our employees and operators are producing improved results, but certain external factors have changed and are impacting results.

"Our goal is to keep everyone in the system focused on executing our strategic plan to drive profitable sales and expanded margins at every restaurant."

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