The biggest investor in The Wendy’s Co., Trian Fund Management L.P., has explored options that include taking over the burger chain, according to federal filings Tuesday.
Trian, controlled by Wendy’s chairman Nelson Peltz, and affiliates own more than 19% of Wendy’s shares. Trian said in its Securities and Exchange Commission filing that it had discussed strategic options with the Dublin, Ohio-based company’s board.
Peltz has been a Wendy’s director since 2008 and his son, Matthew Peltz, has been on the 11-member board since 2015.
Late Tuesday, Wendy’s issued a statement, saying, “The Wendy's Co.’s board of directors and management team regularly review the company's strategic priorities and opportunities with the goal of maximizing value for all stockholders.
“Our board is committed to continuing to act in the best interests of the company and its stockholders,” the company said, “Consistent with its fiduciary duties, the board will carefully review any proposal submitted by Trian Partners.”
Trian, in its SEC filing, said it advised the board Tuesday that it intended “to explore and evaluate the possibility … alone or with third parties” a potential transaction.
Mark Kalinowski, principal in New Jersey-based Kalinowski Equity Research, said in a note Wednesday that an acquisition is likely.
“In addition to the shares being generally under-appreciated in our view, a potential acquisition looks a lot more likely,” Kalinowski said. “And, while it’s possible that Trian ends up acquiring Wendy’s, it’s also possible that the events of the last 24 hours will serve as a catalyst for one or more additional, potential acquirers to become involved.”
Wendy’s stock closed at $16.27 a share on Tuesday but jumped about 11% in after-hours trading.
Kalinowski said, “All in all, we believe that an acquisition of Wendy’s is more likely than not, with $23-$25 per share a reasonable possible price to be paid.”
Wendy’s management, in its statement Tuesday, said “as demonstrated by our recent first-quarter results, we continue to make meaningful progress against our three strategic growth pillars, reinforcing the strength and resiliency of the Wendy's brand and driving robust AUV and sales increases.” The company released first-quarter earnings earlier this month.
For the first quarter ended April 3, Wendy’s net income was $37.4 million, or 17 cents a share, down from $41.4 million, or 18 cents a share, in the prior-year period. Revenues rose to $488.6 million from $460.2 million in the same quarter last year.
Same-store sales were up 2.4% systemwide with a 1.1% increase at U.S. restaurants and a 14.1% increase at international units.
Wendy's, founded in 1969, has about 7,000 restaurants worldwide.
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