Wendy’s soared 16% Wednesday after a report that billionaire Nelson Peltz’s hedge fund Trian Fund Management could buy the flailing fast-food chain in a $1.4 billion deal.
The hedge fund is leading a group including restaurant operator Flynn Group and investment firms BlueFive Capital and Sixth Street Partners, which have offered $7.35 a share in cash to take over Wendy’s, the Wall Street Journal reported, citing anonymous sources.
Its bid marks a roughly 20% premium over Wendy’s closing price on Tuesday of about $1.2 billion, and comes after years of Trian pushing for a sale of the struggling burger franchise.
The company’s stock is down nearly 25% so far this year and more than 70% over the past five years as it has reported a slump in sales, net income and earnings per share as costs rise.
In May, Wendy’s former chief operating officer Robert Wright – most recently CEO of sandwich chain Potbelly – took the helm as chief executive, becoming the chain’s fourth leader in the last three years.
The broader restaurant industry has been struggling, especially fast-food chains, as lower-income consumers cut back on spending amid stubborn inflation and fears of higher interest rates.
But rival Burger King has executed a turnaround – including a revamped Whopper burger and improved customer service – that propelled the chain to the second-largest US burger chain, pushing Wendy’s into third place.
Trian Fund Management believes that Wendy’s is now at “a critical juncture,” people familiar with the matter told the Wall Street Journal.
Leaders at the activist investment fund think the company needs significant capital investments, and that a complex turnaround strategy would be easier to execute as a private company.
The hedge fund is a longtime shareholder in Wendy’s, currently holding a roughly 16% stake.
Trian co-founder Peter May has sat on the fast-food chain’s board for 18 years. Bradley Peltz, one of Nelson Peltz’s sons, joined the company’s nine-person board last year. Nelson and another one of his sons, Matthew, also previously held board seats.
Earlier this year, Peltz and other execs associated with Trian disclosed in a securities filing that they had discussed potential strategic options for Wendy’s, including a sale of the company.
The activist fund had initially pushed for a sale of Wendy’s in 2022, but later backed off.
Wright – Wendy’s current CEO – has acknowledged the chain’s struggles, telling franchisees and investors that the company prioritized savings over ingredient quality, leaned on deals and neglected customer service.
After a disappointing earnings report in August, Wright admitted the company is “clearly not performing at [its] potential.”
Last month, Meritage Hospitality Group – one of the largest Wendy’s franchisees – revealed in a bankruptcy filing that it is planning to close at least 20 locations and as many as 60.
Peltz is worth an estimated $1.5 billion, according to Forbes. His hedge fund Trian boasts $8.5 billion in assets under management and holds stakes in Bank of New York Mellon, DuPont and Mondelez International, home to food brands like Chips Ahoy, Oreo and Ritz.
Earlier this year, Trian and venture-capital firm General Catalyst completed a massive take-private deal of asset manager Janus Henderson.
Peltz’s daughter, Nicola, married Brooklyn Beckham, son of soccer star David Beckham and ex-Spice Girl Victoria Beckham, at the Peltz family estate in Palm Beach, Fla., in 2022.
Nicola and Brooklyn have since made headlines over their dramatic falling out with David and Victoria Beckham.
Flynn Group is one of the largest global restaurant operators and a major Wendy’s franchisee, boasting over 300 Wendy’s locations, according to its website.