Citigroup Inc. and Merrill Lynch & Co. reportedly are backing out of funding Nelson Peltz's bid for Wendy's International Inc., according to Reuters. If true, Peltz's Triarc Cos. would still have the financial support of Deutsche Bank AG and Royal Bank of Scotland plc. Additionally, bookrunners J.P. Morgan Chase & Co. and Lehman Brothers Inc. reportedly are not offering bidders staple financing, added Reuters.
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The decision by the troubled U.S. banks, who both sacked their CEOs last month, to take a pass on Triarc's offer underscores the impact that the subprime mortgage meltdown and subsequent credit crunch has had on Wall Street banks, noted Reuters.
The Reuters news confirms a Nov. 15 report from Merrill Lynch analyst Rachael Rothman, who said that with the current credit crunch, "securing attractive financing rates and sufficient leverage flexibility" will be a challenge in the sale of Wendy's. Rothman also wrote that Wendy's franchisees will benefit from a nonsale, since a sale will most likely lead to cost cuts and turnaround delays.
In April, Wendy's put itself on the auction block following an activist campaign by none other than shareholder Peltz, who owns 9.8% of the chain. — Matthew Wurtzel
See story from Reuters
See Dealscape: Peltz heats up Wendy's sale with low bid
See TheDeal.com: Peltz bids for Wendy's
See DealWatch: Fast Food
See auction profile from AuctionBlock.com
Comments
It’s interesting that JP Morgan might be investing in the entertainment industry. But there are other rumors as well. NewsVisual http://www.newsvisual.com/newsvisual/2007/11/citi-and-jp-mor.html reported that a potential deal that is generating some serious buzz would bring Citigroup and JPMorgan Chase together.