April 25 (Bloomberg) -- Wendy's International Inc., the third-largest U.S. hamburger chain, said it may sell itself after coming under pressure from investors including Nelson Peltz.

Wendy's, which is valued at $2.8 billion on the stock market, said today it formed a board committee to consider options including a sale, merger or change in strategy.

Peltz and former shareholder William Ackman have urged the chain, based in Dublin, Ohio, to boost its stock price. They persuaded Wendy's to spin off Tim Hortons, a coffee and doughnut chain, in September and sell the Baja Fresh chain in November. Wendy's has half as many U.S. locations as McDonald's Corp.

``They still own a ton of assets, a ton of stores,'' said Malcolm Knapp, a restaurant consultant in New York. He said it was unclear if a buyer would try to improve Wendy's operations or sell its real estate and other assets. ``There's a lot of money locked up in that.''

The shares jumped $4.61, or 14 percent, to $37.05 at 6:43 p.m. New York time in trading after the regular close of the New York Stock Exchange. They had fallen 1.2 percent this year before today's announcement.

Wendy's gave no timeline for the review. The study will be led by Chairman James Pickett.

Wendy's also reported a first-quarter profit on sales of extra-spicy chicken sandwiches and other new items. Income from continuing operations was $14.5 million, or 15 cents a share, compared with a loss of $5.9 million, or 5 cents, a year earlier. Sales rose 2 percent to $590.2 million.

`Kicking the Tires'

``People have been kicking the tires and suggesting that it's undervalued,'' said Ron Paul, president of Chicago-based restaurant consultant Technomic Inc. ``The board probably felt they had little choice'' except to put the company up for sale.

Leveraged-buyout firms may be interested in buying Wendy's, he said, adding it would probably be too expensive an acquisition for Yum! Brands Inc., the owner of Pizza Hut, KFC and Taco Bell.

Wendy's bowed to pressure from Peltz in March 2006, adding three board members chosen by him and agreeing to spin off Tim Hortons. Peltz had urged the company to cut costs and sell assets.

Peltz agreed to abandon a proxy fight, though the stand- still agreement with Peltz is set to expire June 30. His Trian funds held about 9.7 million shares as of December, making it the company's largest investor.

Restaurant Buyouts

Triarc Cos., the investment company run by Peltz, owns the Arby's restaurant chain. Last week, the company said it would consider acquisitions of other restaurant companies after announcing it would sell a controlling stake in money manager Deerfield & Co.

Peltz may consider buying Wendy's because he knows the industry, Paul said. Calls to Peltz spokeswoman Anne Tarbell weren't immediately returned.

Buyout companies are buying restaurants because a chain's cash flow and real estate can be used to repay the debt borrowed to finance the transaction.

In August 2006, Lone Star Steakhouse & Saloon Inc. agreed to be acquired for about $600 million. Pernod Ricard SA's sold its restaurant business, including Dunkin' Donuts, for $2.43 billion in March of that year. OSI Restaurant Partners Inc., owner of the Outback Steakhouse chain, agreed to a $3.2 billion buyout in November.

Rachael Rothman, an analyst at Merrill Lynch & Co., wrote in a note yesterday that Wendy's share price may be too high to attract private-equity buyers. ``The valuation makes Wendy's a less attractive LBO candidate than some of the other quick- service restaurant chains,'' she wrote.

Founder

Dave Thomas opened the first Wendy's in 1969, naming the restaurant after his daughter, Melinda Lou, who was nicknamed ``Wendy.'' The company went public in 1976, raising $28 million, and by 1997 had opened its 5,000th restaurant.

Thomas died in 2002 of liver cancer.

Tim Hortons, a Canadian chain, contributed more than half of Wendy's operating profit in 2005.

Under Chief Executive Officer Kerrii Anderson, Wendy's has introduced cold deli sandwiches, a 99-cent chicken sandwich and a vanilla Frosty shake. The products helped boost first-quarter same-store U.S. sales by 3.8 percent.

Wendy's same-store sales had dropped for six consecutive quarters before former Chief Executive Jack Schuessler resigned. Since Anderson took over last April, the company's sales have increased for four consecutive quarters.

Wendy's announced in February that it will expand a breakfast menu to 30 percent of U.S. stores this year and 50 percent next year. The company is entering the breakfast market as competitors such as McDonald's and Burger King Holdings Inc. ramp up their morning offerings.

Of 15 analysts who have covered Wendy's in the past year, two rate the shares ``buy,'' eight say ``hold'' and five have ``sell'' recommendations.

To contact the reporter on this story: Josh Fineman in New York at jfineman@bloomberg.net

Last Updated: April 25, 2007 18:53 EDT