Why Ackman Told Wendy's to Spin-off Tim Hortons

When you're an activist, of course, that word has different meanings to different people, but would you call the CEO and say, we own 5%, we'd like to be on the board, we'd like to tell you how to run your company? Did you do that? Was that intimidating to do that? It's not exactly what we said, because again, we were young and inexperienced. But it was more that we'd find a company, one of the early investments was Wendy's, the hamburger chain. And Wendy's owned 100% of a chain called Tim Hortons in Canada. And Tim Hortons was a very profitable, successful, pure franchise of coffee and donut chain, principally in Canada. And you could fairly clearly see that business was worth about $5 billion at least. It had about $450 million of operating income, probably worth meaningfully more than that. But you could buy all of Wendy's for $5 billion. So literally the market was ascribing zero value to the Wendy's franchise. And our advice to the CEO is, well, just spin off Tim Hortons and then focus on fixing Wendy's. But you can create enormous value in just separating the two companies. So it was a bit like investment banking where we didn't charge a fee. And actually back then, because we couldn't get a return phone call, because we were a tiny little fund circa 2004, we hired Blackstone, which had an investment bank at the time. And we hired them to say, put together a fairness opinion, if you will, of what Wendy's would be worth if they spun off Tim Hortons. And then we wrote a letter to the board. We attached the Blackstone valuation, which was nearly double where the stock was trading. And then six weeks later, magically, they spun off Tim Hortons. Being an activist, was it consistent with your personality to do this? Because you've got to be a tough guy to call up CEOs and say, look, I got a better idea about how to run your company than you do. It was consistent with my personality. I think I've always been some form of an activist, yeah. And today, your focus is on the kind of activist investing, or you've stopped that? So, you know, when you're, no one knows who you are, and you're trying to affect change in a company, you have to sort of be an activist. You have to use the media, the public platform to, in some cases, shame a company into doing the right thing. Twenty years later, having had a meaningful number of successful engagements with companies, we don't really have to do that anymore. And so a lot of the stuff we've done recently has been either buying into a company that already has great leadership, and we're happy to share ideas. In some cases, you know, there needs to be a change in leadership, but we're able to get things done without, you know, sort of what you might call activism. More like engaged owners of businesses.