Wendy's rejects offers, says Peltz "misleading"

LOS ANGELES (Reuters) - Wendy's International Inc (WEN.N) rejected a cash and stock takeover bid and an offer to combine with Arby's, billionaire Nelson Peltz's businesses said on Friday as the hamburger chain argued both offers were low.

Wendy's board has been weighing a sale since last June and on Friday said Peltz was misleading shareholders.

The activist with just under 10 percent of shares has pressed for better financial performance from the No. 3 hamburger chain, which is losing ground to McDonald's Corp (MCD.N) and Burger King Holdings Inc (BKC.N).

Peltz's Triarc Cos Inc TRY.N and Trian Fund Management on Friday said they proposed combining Wendy's and Arby's, a sandwich chain owned by Triarc.

They also offered to buy 100 percent of Wendy's "for over $900 million in cash with the balance in stock," Peter May, an executive at both Triarc and Trian, said in a letter addressed to Wendy's Chairman James Pickett and included in a regulatory filing on Friday.

But Pickett said Trian and Triarc failed to reveal how the proposed deals would value Wendy's.

"We believe that is very misleading to our shareholders unless they also know that the value you ascribed to Wendy's in such proposal was significantly below a level we had previously told you very clearly would be unacceptable," he said in a letter addressed to May and filed with U.S. securities regulators.

Analysts said there was not enough information about offer prices to make a judgment on whether the company's directors did the right thing.

"It's hard from the outside looking in to know whether Wendy's board made the appropriate decision," said Morningstar analyst John Owens, who noted that the company's market value, about $2.2 billion, is more than twice the $900 million cash portion of one of the Peltz offers.

In November, Peltz entities said they made a bid for Wendy's that was below the $37 a share to $41 a share it was prepared to offer in July. Since then, they have announced that they plan to gain control of Wendy's board.

TAKEOVER FINANCING QUESTIONS

While Wendy's directors have mulled a sale, money to finance such deals has dried up as loans to poorly qualified U.S. homeowners have gone bad, pinching big banks and other sources of cash.

"I think the prospect of a takeover has diminished significantly," said Standard & Poor's equity analyst Mark Basham, who put a "sell" rating on Wendy's shares after the mergers and acquisitions market shut down last summer.

Earlier this month, Wendy's said first-quarter sales at restaurants open at least 15 months fell, hurt by bad weather and an early Easter.

Sales were down 0.1 percent at franchised restaurants and 1.6 percent at company-owned locations, the company said.

Shares in Wendy's, which have shed around one-fourth of their value in the last year, gained 1.1 percent to close at $25.38 on the New York Stock Exchange.

(Reporting by Brad Dorfman in Chicago, Nicole Maestri in New York and Lisa Baertlein in Los Angeles; Editing by Brian Moss and Tim Dobbyn)