Wendy's rejects Trian-led $1.4 billion buyout offer, adopts 'poison pill' plan

By Juveria Tabassum and Koyena Das

Nov 5 (Reuters) - Wendy's WEN.O rejected a $1.4 billion take-private offer from activist investor Nelson Peltz's Trian Fund Management and its partners, and adopted a "poison pill" plan to resist pressure from one of its largest shareholders.

Trian's offer came about three months after Wendy's withdrew its annual forecast, cut its dividend and launched a turnaround plan under new CEO Bob Wright aimed at improving menu value and marketing.

"The proposal substantially undervalues the company," the independent board committee created to evaluate the offer said.

The food chain's limited-duration shareholder rights plan aims to stop investors from amassing more than 15% of the company, give its board time to evaluate takeover proposals and to prevent any shareholder from gaining control without paying an appropriate premium, Wendy's said in a regulatory filing.

If triggered, the rights plan would let existing shareholders purchase stock at a discount, reducing the value of the would-be acquirer's stake.

"Now that the board has taken the Poison Pill, Peltz and Trian will need to decide if they want to sweeten the offer, stage a proxy fight, or get on board with Bob Wright’s turnaround attempts," said Andrew Rocco, stock strategist at Zacks Investment Research.

Wendy's shares were up about 1% at $7.75. The group led by Trian had offered to pay $7.35 per share in cash, at a premium of about 20% at the time.

TRIAN'S EFFORTS TO TAKE WENDY'S PRIVATE

Trian and related parties own a 16.3% stake in Wendy's, according to a regulatory filing. Peter May, president of Trian, has served as a Wendy's director since 2008, and Bradley Peltz, one of Nelson Peltz's sons, has served as director since 2025.

Nelson Peltz was partnering with restaurant operator Flynn Group and investment firms BlueFive Capital and Sixth Street Partners on the proposed acquisition, looking to revive the US fast-food chain's struggling sales away from the glare of public-market investors.

Trian, which considered taking Wendy's private in 2022 and backed away in 2023, has campaigned to change strategy and board composition at various companies including Walt Disney DIS.N, Kraft Heinz and Procter & Gamble PG.N.

The activist investor declined to comment.

In recent years, buyout firms have tried to purchase other publicly traded restaurants, including Papa John's, which has fended off offers from Irth Capital and Apollo Global over the last year.

TURNAROUND PLAYS OUT

In the third quarter, Wendy's US same-store sales fell 5.7%. However, its adjusted earnings per share of 13 cents beat estimates.

"We're clearly not satisfied with that performance, but we are encouraged by several early signs of progress," said Wright on a post-earnings call, adding that footfall to its stores improved sequentially through the third quarter.

The company also said it had signed a letter of intent with franchise operator Meritage Hospitality Group to acquire up to 163 Wendy's restaurants. It also made its breakfast offering optional across its US stores to focus on more profitable lunch, dinner and late-night meals.

Wendy's added that other Meritage markets it does not plan on acquiring will be sold and transitioned to other franchisees through a bankruptcy-facilitated process.

"The ball is in Wendy's court. If Wright's turnaround shows progress over the next few quarters, the company will garner a higher valuation. However, if sales remain stagnant, Peltz and Trian will gain more leverage and potentially more board seats," Zacks Investment Research's Rocco said.