Nelson Peltz and Trian Partners, Wendy’s biggest shareholders, are planning to arrange a takeover of the iconic burger chain.
Peltz, who chairs the Wendy’s board and has been an investor in the group for nearly two decades, said in a Securities and Exchange Commission filing late Tuesday that his Trian Fund Management group could “explore and evaluate the possibility of participating, alone or with third parties, in a potential transaction with respect to the Company to enhance shareholder value.” Two other members of the Trian group — Peter May and Matthew Peltz — are also on the Wendy’s board.
Wendy’s said it would “carefully review any proposal submitted by Trian Partners”, which owns an 11.8% stake in the Dublin, Ohio-based chain, while adding it would act in the best interest of shareholders.
“With a history of effecting change within the Wendy’s Company, we believe the probability is high that Trian’s proposals are being seriously considered within the organization,” said KeyBanc Capital Markets analyst Eric Gonzalez, who carries a ‘sector weight’ rating on the stock. “Trian has been an investor in Wendy’s and its predecessor company since late 2005, and over the last 17 years has helped the Company execute various initiatives aimed at shareholder-value creation.”
“A go-private transaction where Wendy can reinvest capital as necessary to accelerate growth might be in the best interest of its investors,” he added.
Wendy’s shares were marked 11.9% higher in premarket trading to indicate an opening bell price of $18.21 each, a move that would peg its market value at just under $4 billion.
Shares in the group hit a two-year low last month, however, after posting weaker-than-expected same store sales for the first quarter and cautioning investors that breakfast sales — a key revenue driver — would likely only rise to the lower end of prior forecasts as customers tame discretionary spending.
Wendy’s had sales of around $488.6 million for the three months ending on April 3, a 6% increase from the same period last year.
The group forecast 2022 earnings in the region of $490 million to $505 million, with global system-wide sales expected to rise 6% to 8% from 2021 levels.