Nelson Peltz’s Trian Fund Management has no plans to make a take-private bid for Wendy’s (WEN.O), opens new tab at this time, sources familiar with the matter told Reuters.
The move comes after the investment firm, a longtime Wendy’s shareholder with around 16% of the fast food chain, was earlier this month reported by Reuters and others to be working on preparing a bid with the help of a consortium of investors, including Bugatti-backed BlueFive Capital and Flynn Group, a Wendy’s franchisee.
News of a possible take-private sent the stock up 14.7% on August 12, with further momentum since pushing it to around a nine-month high, leaving the company with a market value of around $1.7 billion.
On Wednesday Wendy’s stock price tumbled more than 14% in after-hours trading in reaction to the Trian news.
Trian has concerns about Wendy’s performance, including its recent trading price and valuation multiples, as well as its current strategic direction, said the sources who are familiar with the matter but cannot discuss Trian’s thinking publicly.
This leaves Trian keeping an open mind about its future intentions, the sources added, declining to elaborate further.
A representative for Trian declined to comment.
Wendy’s did not immediately respond to a request for comment.
SACRIFICING QUALITY
By pulling back on a possible takeover offer, Trian could be offering new Wendy’s Chief Executive Bob Wright time to execute a turnaround plan to address declining sales that cost it the No. 2 spot among big burger chains.
On Monday, Wright issued a rare corporate mea culpa, telling the Wall Street Journal that the chain sacrificed quality to trim costs. He also rolled out a five-point plan to revive prospects.
Earlier in August, Wendy’s reported a drop in quarterly global sales, lower net income, higher costs and a drop in earnings per share, all of which prompted Wright to say the company is “clearly not performing at (its) potential.”
Wright, who took the top job in May, is the fourth leader of Dublin, Ohio-headquartered Wendy’s in the last three years.
Even as takeover speculation helped support the stock price, Wendy’s shares still trade roughly 60% lower than they did five years ago.
