Wendy’s (NYSE: WEN) recently announced that it will be completing the spin-off of Tim Hortons (TSX: THI) by distributing to its shareholders 1.36 shares of THI for each share of WEN by the end of this month. Since it’s IPO in March when it traded as high as $36, THI has been on a slow slide and now trades around $29.
The stock might interest investors now that all the buzz about the stock has disappeared, the media circus has moved on and even the blog that tracked THI is no longer in existence. Also, one newsletter with a tremendous long-term record recommended its readers to buy Tims under $34. For its part, Tim’s has announced a $200 million share buyback program that could reduce shares outstanding by 3.5% at current prices.
It would be interesting to see if WEN shareholders would flip THI shares as soon as they receive it. Since the public currently owns only 17% of Tims, the spin-off at the end of this month could create a massive overhang that temporarily depresses the share price of Tims and create a nice buying opportunity. I am adding THI to my stock watch list.
Note: This is not a recommendation to buy THI or any other stock. Never buy stocks based on what you read on the internet or see on television or hear on the radio. Do your own due diligence.