TLDR
- Wendy’s stock fell more than 14% in after-hours trading after Reuters reported Trian Fund Management has no current plans to bid for the company.
- Trian, which owns roughly 16% of Wendy’s, had been reported to be assembling a consortium to take Wendy’s private.
- The takeover speculation had pushed WEN to a nine-month high, with the stock rising 14.7% on August 12 when the deal rumor first surfaced.
- Wendy’s U.S. same-restaurant sales fell 7% in Q2, and the company withdrew its full-year outlook and cut its dividend.
- CEO Bob Wright, in the job since May, has laid out a five-part turnaround plan after admitting the chain sacrificed food quality to cut costs.
Wendy’s stock dropped more than 14% in after-hours trading on Wednesday after Reuters reported that Nelson Peltz’s Trian Fund Management has no current plans to make a take-private bid for the burger chain.
The stock had been trading near a nine-month high heading into Wednesday’s close, with a market value of around $1.7 billion. That rally was almost entirely built on takeover hopes.
Trian, a longtime Wendy’s investor holding roughly 16% of the company, had been reported earlier this month to be building a consortium with BlueFive Capital and franchisee Flynn Group to take Wendy’s private. That report sent the stock up 14.7% on August 12.
Wednesday’s after-hours drop wiped out most of that gain.
Sources told Reuters that Trian has concerns about Wendy’s recent trading price, valuation multiples, and current strategic direction. The firm is keeping an open mind about its future plans but has no active bid in the works right now.
A Trian representative declined to comment. Wendy’s did not immediately respond.
Weak Fundamentals Behind the Rally
Strip away the deal speculation and Wendy’s underlying numbers look rough. U.S. same-restaurant sales fell 7% in the second quarter. International same-restaurant sales dropped 2.3%. Revenue rose 1.7% to $570.6 million, but adjusted earnings fell to 18 cents a share, down from 29 cents a year earlier.
The company also withdrew its full-year outlook and cut its dividend to preserve cash.
CEO Bob Wright, who took the top job in May, made headlines this week by telling the Wall Street Journal that Wendy’s sacrificed food quality to reduce costs. It was a rare public admission from a sitting CEO.
Wright is the fourth CEO at Wendy’s in three years.
The Turnaround Plan
Wright has outlined a five-part plan targeting food quality, value, marketing, restaurant operations, digital engagement, and unit growth.
With a takeover now looking unlikely, investors will focus on whether that plan can deliver results.
Trian has been involved with Wendy’s for nearly two decades. Co-founder Peter May sat on its board for 18 years. Nelson Peltz and two of his sons have held board seats at various points, with son Bradley joining last year.
This is not the first time Trian has flirted with a buyout. The firm considered taking Wendy’s private in 2022 before stepping back from those plans in 2023.
Even before Wednesday’s after-hours drop, WEN was trading roughly 60% below its level from five years ago.
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