Wendy's Shares Surge On News Of $1.4 Billion Buyback, Long-term Outlook

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The Wendy's Co. shares surged 5.9% in premarket trade Wednesday, after the company unveiled a new $1.4 billion share buyback, announced the closing of the sale of its bakery operations, reiterated guidance for 2015 and provided a longer-term outlook. The fast-food chain said it will start today with an $850 million share buyback program using cash on hand, cash flow from operations, the proceeds of a $925 million securitization refinancing, pretax proceeds of $400 to $475 million from a streamlining program and after-tax proceeds from the sale of its bakery operations. The program will include a modified Dutch Auction tender offer for up to $639 million of its common stock at $11.05 a share to $12.25. It will also include the purchase of up to $211 million of stock currently owned by its biggest shareholder Trian Group. Trian owns about 24.8% of the company's outstanding shares, and is planning to cut that stake to 17% to 19.68%. "We reaffirm our commitment to growing our dividend in line with Adjusted earnings per share growth, which we now expect to exceed 20 percent beginning in 2018, primarily as a result of our new share repurchase authorization," Chief Financial Officer Todd Penegor said in a statement. Shares have gained 23% in the year so far, while the S&P 500 has gained just 2.4%.

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