Nelson Peltz in talks to raise funds for Wendy’s go-private bid
The move is a value play for the hamburger chain whose shares have slid 70% in the past 5 years
Nelson Peltz’s Trian Fund Management is seeking investor backing for a bid to take US fast-food chain Wendy’s private, after the restaurant operator’s shares have fallen more than 40 per cent over the past year.
Trian in recent weeks has held discussions with outside investors, including in the Middle East, about financing a potential takeover of Wendy’s, according to people familiar with the matter.
Wendy’s was founded by Dave Thomas, who often featured in the company’s advertising, in 1969 as an “old fashioned” hamburger chain with square beef patties and a milkshake known as a Frosty.
Trian has a history with Wendy’s dating back to a 2005 activist campaign, and owns with Peltz 16 per cent of the company. Trian executive Peter May is on the Wendy’s board along with Bradley Peltz, one of Nelson Peltz’s sons. The Peltz family also holds a minority stake in an investment vehicle that owns 87 Wendy’s franchises in the New York region.
Wendy’s — which runs 7,000 stores globally, mostly in the US — reported lacklustre earnings last week citing high beef costs and weak traffic, pushing its share price down further. Its shares are down 71 per cent over the past five years. As of Monday’s close, the chain’s enterprise value was $5.1bn.
Fast-food chains have been trying various promotional tactics and new menu items to keep market share amid stingier consumers, elevated labour and material costs and competition from higher-end “fast-casual” restaurants such as Chipotle and Sweetgreen as well as sit-down burger rivals including Chili’s and Applebee’s.
McDonald’s and Burger King have had recent success with menu innovation and value pricing. However, their achievements have hurt Wendy’s and the high-end Shake Shack — the latter’s shares fell a quarter after disclosing a disappointing outlook for the current quarter.
Trian said in a regulatory filing in February that the fast-food chain was “undervalued”, pushing for the company to consider strategic alternatives and saying it was considering whether to launch a takeover bid or sell down its stake.
Trian has not made a formal approach to buy Wendy’s and there is no guarantee that the financing discussions will result in a takeover bid, the people said. Peltz pushed for Wendy’s to consider strategic options in 2022 before backing down a year later.
Following Trian’s regulatory filing in February, Wendy’s said it would “carefully evaluate” if and when any takeover approach from the activist investor materialised. Wendy’s is in the early stages of its so-called “Fresh Start” turnaround plan, an attempt to boost ailing US sales by improving its menu and closing down underperforming locations.
Trian earlier this year sealed an $8bn takeover of London-based asset manager Janus Henderson, in which it was also a longtime shareholder, with the backing of General Catalyst and the Qatar Investment Authority.
Wendy’s did not immediately respond to requests for comment. Trian declined to comment.
Best known for fighting activist campaigns at US corporate giants including General Electric, Mondelez International and Disney, Trian has roughly $7bn of assets under management.
Low valuations among listed restaurant operators have driven a wave of take-private interest in the sector in recent months. Denny’s earlier this year was taken private in a $620mn deal. Papa John’s is also considering takeover interest from Qatari-backed fund Irth Capital Management, said separate people familiar with the matter.