Filed under: Private equity industry, Activist investing, Value and lack thereof
Wendy’s International (NYSE: WEN) might not see an auction-style sale after all. After months of speculation about the fate of the global burger flipper, the sale of the company might be on indefinite hold due to continued turmoil in the credit markets. What this means is that Wendy’s will remain for sale after a short intermission. The length of that intermission may be six months or longer.
Although bids on the company are due today at 5:00 pm EST, the company might pull the rug out from under the bids it has received so far and put the sale of the company on hold. Activist investor Nelson Peltz, who stated he has been interested in buying the company (and who pushed for a sale) will most likely
have to go home empty-handed today.
The problem is the financing provided by the banks servicing Wendy’s at this time. Apparently, the conditions of such a sale by the chain’s two largest bank creditors contain details that could leave a nasty taste in the mouth of bidders; a sales contract clause gives the two banks (JPMorgan and Lehman Brothers) the right to withdraw financing if the credit markets continue to deteriorate further. Without a crystal ball, who knows when or if that’ll happen. My guess: the credit market will sink further into 2008. Get ready to ride the wave.
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