The owner of 134 Wendy's restaurants wants to make a bid for the nation's No. 3 hamburger chain with two private-equity firms.
David Karam, president of Cedar Enterprises Inc., said Wednesday that he and his partners have been invited by Wendy's International Inc. to a second round of talks. He is backed by Kelso & Co. and Oak Hill Capital Partners.
"I've been involved in the brand," he said. "I see the great potential of it."
Cedar Enterprises, based outside Columbus, owns Wendy's restaurants across the country that have a combined annual revenue of $200 million.
Karam's first-round proposal was enough to garner entry into a second round next month, where bids are expected. He would not disclose how much he is willing to pay for Wendy's, but said the company's current stock price is rich.
Wendy's shares rose 20 cents to $33.26 Wednesday.
"Fundamentally, there's great upside with the brand, but the reality is no one wants to overpay," he said.
Billionaire investor Nelson Peltz has said his company, Triarc Cos., is prepared to offer $37 to $41 per share for Wendy's in a deal that would peg Wendy's total value between $3.2 billion and $3.6 billion. Triarc owns the fast-food chain Arby's and is also a major Wendy's shareholder.
Peltz said in July that he and his allies had increased their Wendy's stake to 9.8 percent of all outstanding shares.
Wendy's formed a committee in April to determine how best to boost its stock price, including a possible sale. Wendy's spokesman Denny Lynch and Peltz's spokeswoman Carrie Bloom declined to comment Wednesday.
In the past year, Wendy's has spun off its Tim Hortons coffee-and-doughnut chain and sold its money-losing Baja Fresh Mexican Grill following pressure from Peltz and other investors to boost the value of Wendy's stock.
As a franchisee, Karam said he fears Wendy's sales and product development would continue to stagnate under owners who do not know the chain as well as he does.
Karam's father, Joseph, was one of Wendy's original investors and became a franchisee in 1975. David Karam has run Cedar Enterprises for 22 years.
Karam has the backing of the family of Wendy's founder Dave Thomas, said Pam Thomas Farber, Thomas' daughter. The family would like to see the company turned over to someone involved in the company, she told The Columbus Dispatch, which first reported Cedar Enterprises' bid.
"We don't want the company to leave," she said. "It's been very hard on the family."
Wendy's, based in suburban Dublin, operates about 6,600 restaurants in the United States and abroad.
It trails rivals McDonald's and Burger King.