A group led by Trian Fund Management offered to buy Wendy’s shares it does not already own for $7.35 each, giving the restaurant chain’s board a take-private proposal to assess.
The group submitted the unsolicited, nonbinding offer on Oct. 28. Trian’s filing with the U.S. Securities and Exchange Commission describes the price as about 20% above Wendy’s Oct. 27 closing price. Flynn Group LP, BlueFive Capital and Sixth Street Partners are also in the group. Trian said it beneficially owns about 16.3% of Wendy’s outstanding common stock. EconoTimes covered the group’s bid earlier.
Wendy’s said an independent committee of directors will review the proposal. The company said there is no assurance a transaction will be pursued or completed, and shareholders do not need to take action now. Trian said the group would finance the offer without new debt or a financing condition. It said equity commitment letters would be delivered if the parties sign definitive agreements.
The bid comes as Wendy’s works through weaker sales. For the quarter ended June 28, U.S. same-restaurant sales fell 7% from a year earlier, and global systemwide sales declined 6.5%. The company reported net income of $32.6 million. In Wendy’s Aug. 7 results release, President and CEO Bob Wright said, “Our traffic, our value proposition and franchisee economics are not meeting our expectations.”
For the six months ended June 28, Wendy’s said cost of sales accounted for a larger share of sales. The company linked the increase to lower traffic, higher commodity costs and higher restaurant labor rates. Its filing identifies beef as one of several commodities with prices that can affect results, but does not isolate beef’s contribution to the cost increase.
Trian’s proposal presents private ownership as a way to provide longer-term capital for a turnaround. The firm points to consumer pressure, commodity inflation and competition in the burger market as challenges facing the business. Wendy’s plans to discuss its strategic plan and financial results on its third-quarter earnings call Nov. 5.
