Nelson Peltz's Trian Fund Management has been holding discussions with outside investors, including in the Middle East, about funding a potential bid to take Wendy's $WEN private, according to the Financial Times. No formal offer has been made.
Trian and Nelson Peltz together hold about 16% of Wendy's, which carries a market capitalization of $1.3 billion. In a February SEC filing, Trian said Wendy's stock was undervalued and disclosed that it had spoken with possible financing sources about potential deals, including an acquisition or other major transactions. Nelson Peltz had also explored a possible takeover of the burger chain in 2022.
Wendy's stock jumped about 22% in premarket trading following the report. Neither Wendy's nor Trian offered a response when contacted for comment.
Any transaction would unfold against the backdrop of Wendy's ongoing 'Fresh Start' initiative, a restructuring effort that targets stronger domestic sales performance, a refreshed menu lineup, and the elimination of its lowest-performing restaurants. The company beat Wall Street's first-quarter earnings and revenue expectations but reported a sharp deterioration in domestic performance. U.S. same-restaurant sales fell 7.8% in the quarter ended March 29, while net income dropped to $22.7 million from $39.2 million a year earlier. Adjusted EBITDA declined 10.6% to $111.3 million. Wendy's left its full-year guidance unchanged, calling for adjusted earnings per share of $0.56 to $0.60.
Across the broader fast-food sector, persistently soft consumer demand has weighed on U.S. sales, with household budget pressures and a weakening labor market keeping more diners away from restaurant counters, Reuters noted. Wendy's stock is down about 19% so far this year.
At the time of the February disclosure, Wendy's indicated that its board stood ready to evaluate any Trian proposal through the lens of its fiduciary obligations, while emphasizing that management remained focused on domestic operational improvements and international expansion. A newly signed franchise agreement calls for as many as 1,000 Wendy's locations to be built across China over a decade.