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Nelson Peltz’s Trian Fund Management made an offer Wednesday to buy Wendy’s for about $1.4 billion, which would make the fast-food chain a private company.
Trian is a longtime Wendy’s shareholder, and Peltz’s hedge fund leads a group that has proposed buying the struggling fast-food giant for $7.35 per share in cash.
Wendy’s $1.4 billion offer represents a premium of about 20% to the company’s valuation of $1.2 billion as of Tuesday’s market close.
The offer from the Trian-led group was confirmed by FOX Business and disclosed in a filing Wednesday. The Wall Street Journal was first to report on the offer.
WENDY’S LOSE ITS STATUS AS SECOND LARGEST BURGER CHAIN AFTER 6 YEARS OF OPERATION
Wendy’s stock has struggled over the past five years. (Mike Campbell/NurPhoto via Getty Images)
Shares of Wendy’s had fallen about 68% over the past five years as the market opened Wednesday, although the stock jumped nearly 17% Wednesday morning following the news.
The Trian-led group proposing to buy Wendy’s includes restaurateur Flynn Group as well as investment firms BlueFive Capital and Sixth Street Partners.
The group said in a letter that making Wendy’s a private company would allow it to better complete a complicated turnaround process that is expected to take several years and require major capital investments.
THE MAJOR WENDY’S FRANCHISEE FILES FOR BANKRUPTCY
Nelson Peltz, founder and CEO of Trian Fund Management, said in the letter that Wendy’s would be better positioned as a private company. (Marco Bello/Bloomberg via Getty Images)
“Wendy’s finds itself at a critical juncture. The external environment has become increasingly challenging given significant pressures on the U.S. consumer, economic uncertainty, persistent commodity inflation and intensifying competition, particularly in the QSR burger category,” the group wrote.
“The business requires significant capital investments to reduce leverage and execute strategic initiatives necessary to improve system performance,” he adds.
WENDY’S TO CLOSE HUNDREDS OF RESTAURANTS AS COMPANY SEEKS TO FOCUS ON VALUE TO INCREASE SALES
| Teleprinter | Security | Last | Change | Change % |
|---|---|---|---|---|
| MAGNIFYING GLASS | NO DATA AVAILABLE | – | – | – |
The letter states that, in the group’s view, the alternative to accepting Wendy’s buyout offer is “continued exposure to market volatility as the Company works to manage its balance sheet around debt maturities and significant capital investments required for the brand, all under near-term pressure from the public markets.”
“We believe private ownership is the best route and provides the patient, long-term capital needed to restore the business and franchise system to a position of strength,” the group added.
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