Trian Partners, led by Nelson Peltz, disclosed in a new filing with the U.S. Securities and Exchange Commission that it has entered into a purchase agreement with Wendys Co (NASDAQ:WEN), which is commencing a “Dutch auction” tender offer to repurchase up to $639 million in common shares. Trian, together with its members and affiliates, holds 89.54 million Wendys Co (NASDAQ:WEN) shares, representing 24.63% of the company’s outstanding common shares. The filing indicates that the shares held by Trian Fund, 64.80 million, has remained unchanged since the fund’s 13F filing for the reporting period of March 31. Under the purchase agreement with Wendys Co (NASDAQ:WEN), Trian has agreed to sell a portion of its common shares to the company following completion of the tender offer.
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New York-based Trian is an activist hedge fund founded by Nelson Peltz, Peter W. May and Edward P. Garden in 2005. The fund has investors ranging from insurance companies to pension funds and university endowments. The value of Trian’s public equity portfolio at the end of the first quarter totaled $8.56 billion. Its top holdings, in terms of value, are represented by E I Du Pont De Nemours And Co (NYSE:DD), PepsiCo Inc. (NYSE:PEP), and Mondelez International Inc (NASDAQ:MDLZ).
Under an agreement with Wendys Co (NASDAQ:WEN), Trian will not tender or sell any of its shares during the forthcoming tender offer. The investor was requested by Wendys Co (NASDAQ:WEN) to not sell shares in the offer to maximize liquidity for other stockholders, to avoid impacting the purchase price received by stockholders participating in the tender offer, and to provide certainty regarding the hedge fund’s participation in the stock buyback program. At the same time, Wendys Co (NASDAQ:WEN) has agreed to purchase a pro rata amount of its shares back from Trian following the completion of the tender offer. These shares will be purchased at the price received by stockholders participating in the tender offer.
Pursuant to the tender offer, Wendys Co (NASDAQ:WEN)’s stockholders may tender all or a portion of their shares at a price specified by the tendering stockholder of not less than $11.05 and not more than $12.25 per share. They may also tender their shares without specifying a purchase price, in which case their shares will be purchased at the purchase price determined in accordance with the tender offer. On the expiration of the offer, the company will determine the lowest price within the range of prices, enabling the Company to purchase up to $639 million of its common stock. The tender offer will expire at the end of the day on June 30, 2015, unless extended or terminated by the company.
In a statement, Wendys Co (NASDAQ:WEN) said that the tender offer is part of an $850 million stock buyback program, which also includes a separate purchase of up to $211.0 million of the company’s common stock from Trian. Wendys also noted in its statement that Trian intends to reduce its shares ownership in the company from 24.8% to between 17% and 19.68% over the next few months by selling shares to the company and in the open market and/or privately-negotiated transactions.
Wendys Co (NASDAQ:WEN) is one of the world’s largest quick-service hamburger companies. During the past 12 months, shares of the company’s stock have increased by a strong 41.19%. Among the largest shareholders of the company is Murray Stahl’s Horizon Asset Management, which held 28.60 million shares as of the end of the first quarter.