Burger chain Wendy’s jumps 15% as Nelson Peltz makes buyout bid

Shares of burger chain Wendy’s surged after news that a group of investors led by billionaire Nelson Peltz’s Trian Fund Management could take the company private for $1.4 billion. The offer follows two difficult years for the fast-food company. Its market value has plunged 65% over that period, even including Wednesday’s rally.

A group that includes longtime Wendy’s investor Trian Fund Management intends to acquire the company for $1.4 billion and take it private, according to documents filed with the U.S. Securities and Exchange Commission. The offer of $7.35 per share represents a 20% premium to Tuesday’s closing price. The company currently has a market capitalization of $1.17 billion.

Alongside Trian, the consortium includes investment companies BlueFive Capital and Sixth Street Partners, as well as Flynn Group, one of Wendy’s largest franchisees. Peltz had sought to buy the company in August but backed away over concerns about its performance. Wendy’s shares plunged 13% at the time.

Wendy’s troubles have made it a more affordable acquisition target, CNBC writes. Spending-conscious consumers have been eating out less often, prompting restaurant chains to lean heavily on discounts to attract diners. Wendy’s has also cycled through CEOs, each with a different vision for turning around the struggling chain. The company’s sales have declined for six consecutive quarters.

After around two years of struggling to compete with giants such as McDonald’s and Taco Bell, as well as newer rivals such as Shake Shack, Wendy’s is on the verge of widespread restaurant closures, Yahoo Finance reports. In the first half of the year, 289 U.S. locations closed, according to the company’s second-quarter financial report. Veteran restaurant analyst Andy Barish of Jefferies believes the chain could lose another 100 locations by the end of 2027, more than previously expected.

Barish noted that Meritage Hospitality Group, a franchisee operating more than 300 Wendy’s locations, filed for bankruptcy in September. Meritage had planned to close at least 41 restaurants. Reports emerged this week that the number could reach 60, according to Yahoo Finance. Other franchisees could also face difficulties because of debt, high interest rates, and rising beef, labor, and construction costs, Barish believes.

Of the 27 analysts covering Wendy’s, 18 have “hold” ratings on the stock. Three others recommend buying, and six selling.