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Peltz makes move on Heinz, a day after Wendy's win

Written by: Staff

CHICAGO, Mar 4 (Reuters) Billionaire investor Nelson Peltz stepped up his drive to squeeze more value out of his holdings on Friday by trying to put nominees onto the board of Heinz Co., a day after getting Wendy's International Inc. to accept his choices.

Heinz has struggled with its business in Europe, while Wendy's has suffered from stiff competition from a revitalized McDonald's Corp. and lackluster sales its Baja Fresh Mexican food chain. Shares of both companies were up midday, with Heinz up 1.6 per cent and Wendy's up 3 per cent.

Peltz, who controls less than 5 per cent of Heinz shares, wants five directors on the board of ketchup maker Heinz, including himself and professional golfer Greg Norman, Heinz said, citing a notice it received from Peltz's Trian Partners Master Fund L.P. that said Trian sought to make the nominations. Norman is chairman and chief executive of Great White Shark Enterprises Inc, Heinz would not say if it has met with or plans to meet with Peltz to discuss initiatives the company should take.

''We don't comment on meetings with individual shareholders, but we have an open door policy of meeting with shareholders,'' Ted Smyth, a Heinz spokesman, said.

Heinz shares have rallied more than 11 per cent since the beginning of February on rumours and a CNBC report that Peltz could stage a proxy fight to get directors on Heinz's board.

But the stock is down almost 3 per cent since the beginning of 2005, underperforming the Standard&Poor's 500 index .SPX>, which is up about 6 per cent.

Heinz has faced many problems in its European business, including volume declines in baby food in Italy and frozen foods in Britain.

The company said in September that it would sell its European seafood, vegetable and frozen food operations to try to focus on ketchup, condiments and sauces; meals and snacks and baby food.

The planed overhaul is similar to actions Heinz took in North America in 2002, when it sold StarKist tuna and other businesses to Del Monte Foods Co..

A spokeswoman for Trian could not be reached immediately to specify what actions Peltz would like Heinz to take to improve shareholder value.

Despite posting a 23 per cent drop in profit for its fiscal third quarter this week, analysts have said Heinz is taking the steps it needs to improve its business and some question how much cost savings Trian can find at Heinz.

Christine McCracken, analyst at FTN Midwest Securities Corp. this week reiterated a ''neutral'' rating on the stock, ''based on our belief that the firm has properly positioned its portfolio for growth by focusing on a few key categories and eliminating its less profitable non-core product lines.'' The move on Heinz's board comes just as Peltz reached an agreement with hamburger chain operator Wendy's International to add three directors to its board and for the company to seek strategic alternatives for its struggling Baja Fresh Mexican food chain.

Trian also seeks to restrict Heinz's board from making any amendments to the company's bylaws which would impede or restrict Trian Partners from electing its nominees, Heinz said.

Heinz has 12 directors, including Chairman William Johnson, and each director comes up for election every year.

Aside from Peltz and Norman, Trian's list of nominees includes Peter May, president of Trian Fund Management; Edward Garden, portfolio manager at Trian Fund Management; and Michael Weinstein, chairman of Inov8 Beverage Company LLC.


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