Wendy's/Arby's Gets Sandwiched

Nelson Peltz, Chairman of Triarc, the franchisor of Arby's restaurant chain, was able to strike a buyout deal with Wendy's (WEN - Analyst Report). Under the merger agreement, which closed on September 29, 2008, WEN shareholders received 4.25 shares of Triarc Companies for every one share of Wendy's.

Wendy's incoming management team, led by Arby's CEO, have outlined what we think is a viable, albeit multi-year turnaround plan that includes improving margins, reinvigorating the brand, revitalizing comps and expanding internationally.

However, Wendy's turnaround efforts come at a difficult time for the industry, which faces rising input costs and consumer spending pressures. While we think there is a lot of low-hanging fruit for initial margin improvement, management's 500 basis-point target will in our opinion take at least two years and necessitate executing on many levels.

Read the full analyst report on WEN