It appears as if the Peltz controlled SPAC, Trian Acquisition I, almost participated in the Wendy's transaction:
The Wendy’s Deal That Wasn’t
April 24, 2008, 11:22 am
Wendy’s International and Triarc were sounding quite chummy on Thursday as they announced their proposed $2.3 billion stock-for-stock merger. But as recently as last week, the two sides were sniping at each other over several things, including two other deals proposed by Triarc that the Wendy’s board shot down.
One of the rejected bids was especially interesting because it came with $900 million in cash for Wendy’s shareholders, as opposed to Thursday’s all-stock arrangement. And there was particular controversy over the role played by Trian Acquisition I – one of the largest of the “special purpose acquisition companies,” or Spacs, that have become all the rage in the last year or so.
First, some explanations of the various “Tri-” entities in this complex merger dance.
Triarc is the publicly traded parent of the Arby’s restaruant chain; its chairman is Nelson Peltz, the billionaire investor. Mr. Peltz and Peter May, Triarc’s vice chairman, own about 35 percent of the voting rights in Triarc.
Mr. Peltz and Mr. May also run Trian, a hedge fund that has a stake of nearly 10 percent in Wendy’s. For the last two years or so, Trian has been pushing for an overhaul of Wendy’s operations.
And then there is Trian Acquisition I, which went public in January, raising about $906 million. As a Spac, Trian needs to complete an acquisition within a certain amount of time, or else liquidate and give its remaining cash back to shareholders. Mr. Peltz is the Spac’s chairman, and Mr. May is its vice chairman.
Got that? Now back to Wendy’s: Just last week, Mr. May wrote a letter to James Pickett, Wendy’s chairman, criticizing his company for the fact that Triarc’s two merger proposals had been “summarily rejected.”
The letter, which was filed with the Securities and Exchange Commission, indicated that neither proposal depended on third-party financing. That should be a major selling point, because the failure to get (and keep) outside financing has derailed many deals of late.
Mr. Pickett begged to differ. In a reply that was also filed with regulators, Mr. Pickett said the Triarc deal that came with a $900 million cash component was actually offering cash held by Trian Acquisition, the Spac.
“So far as we can tell, that is financing that is not Trian’s or Triarc’s to offer,” Mr. Pickett said in his letter, which called Mr. May’s letter “very misleading” several times. “Rather, it belongs to the shareholders of the Spac. I believe our shareholders would consider that a substantial third-party financing condition.”
In the end, it seems as if the Spac-related deal is dead. There was no mention of the Spac in Thursday’s announcement of the merger between Triarc and Wendy’s.
Still, it is worth noting how this Spac popped up as a potential source of financing. With banks suddenly leery of lending to fund acquisitions, could Spacs — which collectively have tens of billions of dollars that they are itching to spend — help pick up the slack?
This strategy has its own problems, as Mr. Pickett was quick to point out: Spac shareholders have the right to vote down any transaction, which could leave buyers in a lurch.
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