Wendy’s rejected a $1.4 billion buyout from billionaire Nelson Peltz’s Trian Fund Management, claiming that the offer “substantially undervalues” the company and adopting a “poison pill” plan to protect the company from a hostile takeover.
The burger chain’s board unanimously opposed the offer that would have taken the company private after years of declining sales and franchise closures.
“The Independent Committee thoroughly evaluated this proposal and unanimously concluded that it substantially undervalues Wendy’s standalone prospects and long-term earnings potential,” said Board Chairman Art Winkleblack.
Shares rose more than 2% after a better-than-expected earnings report on Thursday.
Peltz’s hedge fund – which already owns 16% of the company – was ready to take the burger chain private at $7.35 per share saying it was at a “critical juncture” and claiming that a multi-year overhaul would be easier to do off the market.
The announcement last week sent the stock soaring 16%. The hedge fund also made a hostile takeover attempt of the company in 2022.
The board adopted a shareholders’ right plan on Thursday that would grants shareholders the right to purchase shares at a discount if a person owns more than 15% of Wendy’s shares — protecting the company from another takeover attempt.
Peltz’s son Bradley is a board member, and he also operates about 90 franchises in New York and New Jersey, along with Pennsylvania, according to the Wall Street Journal.
CEO Bob Wright, who joined the Frosty-serving chain in May, is confident in his turnaround strategy.
Wright – who managed to revive sales at the Potbelly Sandwich Works chain – faces a stock that has dropped 24% this year and has plummeted more than 70% over the past six years.
“We will rebuild the menu at the ingredient level, at the menu item level, and the category level, while also addressing the menu price architecture that brings value to our customers,” said Wright.
Wendy’s closed 240 restaurants in 2024 and has plans to close 358 chains in 2026.
One of the company’s largest franchisees filed for bankruptcy protection in September.
Wendy’s has more than 7,000 locations worldwide.
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