Trian Pauses Potential Wendy’s Takeover Bid

Wendy’s Shares Fall after Reports Say Nelson Peltz’s Firm will not Pursue a Bid Now

Nelson Peltz and his company, Trian Fund Management, have no current plans to buy Wendy’s and take it private, according to sources knowledgeable about the once-rumored deal. The sources made this disclosure to Reuters, with its report picked up by the New York Post and Fargo, N.D., talk radio station KFGO.

Earlier this month, Reuters had reported – again citing anonymous sources – that Peltz and Trian Fund Management were likely to approach Wendy’s with a bid. Peltz had reportedly been assembling an investment consortium that included Flynn Group, which is a major Wendy’s franchisee, and BlueFive Capital, an Abu Dhabi investment firm. 

Market Reaction to Potential Deal

The stock market had welcomed the sale possibility, with Wendy’s share prices rising nearly 15% on Aug. 12 in response to the potential sale and speculation that the brand would go private. The stock price edged up a little further after that, reaching a market value of approximately $1.7 billion, Reuters said. But on Wednesday, after reports that Trian wasn’t going to spearhead an ownership takeover, Wendy’s stock price fell more than 14% during after-hours trading.  

The sources told Reuters that Trian has concerns about Wendy’s performance, including its recent trading price, as well as its current strategic direction. Earlier this month, Wendy’s had reported a quarterly global sales decline, ⁠lower net income, rising costs and a drop in earnings per share. Recently installed CEO Bob Wright has stated candidly that the company is not performing up to potential. 

By retreating from a possible takeover ​offer, the Reuters report speculated that Trian could be offering Wright some time to implement a turnaround that will reverse the brand’s falling sales. Wright was installed as CEO in May. Reuters’ sources indicated Trian and Peltz might reconsider making a bid for the burger chain later down the line. 

Wendy’s CEO Admission and Plans

In Monday’s Wall Street Journal, Wright conceded that Wendy’s quality had suffered in the brand’s effort to cut costs. He also stated that Wendy’s had become overly reliant on promotional deals and value tactics. 

To shore up Wendy’s financial health, Wright has developed a five-point recovery plan. He told The Journal that the plan will address food quality and value, store upgrades, operations, marketing and digital sales. 

To complement that plan, Wright is shaking up his leadership team. Most pointedly, former McDonald’s executive Tariq Hassan on Monday was named to the new-to-Wendy’s position of chief marketing and customer growth officer. At McDonald’s, Hassan had served as chief marketing and digital customer experience officer. Wright told The Journal that Hassan’s track record “is very strong for exactly what we need.” (The company’s current head of U.S. marketing will be leaving, The Journal said.)

Trian, Peltz History with Wendy’s

The relationship of Trian, Peltz and Wendy’s is a broad one that goes a long way back, Reuters has noted in its reporting. Trian owns a little more than 16% of the fast-food brand’s stock, and Peltz is a former chairman of Wendy’s board of directors. He had pondered buying Wendy’s about three years ago, but did not make the move. 

In addition, Trian’s co-founder, Peter May, has notched service on Wendy’s board of directors for 18 years. And last year, Bradley Peltz, one of Nelson Peltz’s sons, joined the nine-person board. Nelson Peltz and another son, Matthew, had previously held positions on the Wendy’s board.

Wendy’s is a legacy franchise brand. Dave Thomas founded the burger chain in 1969 in Dublin, Ohio, where it is still headquartered. Representatives for Wendy’s ⁠and Trian declined to comment for the Reuters article.