Wendy’s Could Be Next for a Hostile Takeover — What Should You Do With Your Stock?
Over the past few months, the biggest rumor swirling around fast food retailer Wendy’s was when it was going to start selling the highly anticipated strawberry Frosty — its first new flavor in almost three years. However, now a potential takeover of Wendy’s led by prominent corporate raider Nelson Peltz might eclipse that delicious news, according to CNN.
Peltz is already Wendy’s chairman and his management fund, Trian Partners, is the burger business’s largest stockholder. Back in May, Peltz said that Trian would be open to a sale or merger of the quick-service restaurant chain. However, it now appears likely that a deal more in line with Peltz’s aggressive business style is in the works.
Speaking at a Securities and Exchange Commission (SEC) filing on May 24, Peltz stated that he and Trian are considering a takeover to boost shareholder value maximization of Wendy’s, per CNN Business. CNN described Peltz as “an activist investor known for pushing under-performing companies to restructure, spin-off businesses and even break up.” He has previously pushed Proctor & Gamble and Mondelez to greater heights and looks to conceivably do the same for a stagnating Wendy’s.
Wendy’s had low growth in its 2022 first quarter, with a global sales increase of 2.4% at its restaurants open at least 15 months, according to CNN Business. Its sales growth didn’t meet market expectations and paled in comparison to its nearest competitors: McDonald’s and Burger King. The two hamburger giants had first-quarter sales growth of 11.8% and 10.3%, respectively, at its restaurants open at least a year.
A takeover by Peltz might bring good news for investors and franchisees. Although some market commentators like Zach’s have Wendy’s stock (WEN) listed as a firm “hold,” others, including MarketBeat, have the company as a consensus “buy” among its contributing analysts, noting the company’s strong forecasted upside and analyst interest.
Peltz is known for shaking things up, and that might be just what Wendy’s needs. The day after the SEC filing, investors saw an optimistic 11% jump in Wendy’s stock. In its press statement, Wendy’s said, “The Board will carefully review any proposal submitted by Trian Partners,” adding, “we remain focused on achieving our vision of becoming the world’s most thriving and beloved restaurant brand.”
Wendy’s isn’t the only acquisition Peltz is mulling over, as CNN reported that Peltz was also interested in taking over London-based consumer giant Unilever, which controls popular brands such as Dove soap, Hellman’s mayonnaise and Vaseline. Peltz has joined Unilever’s board of directors and currently holds a 1.5% stake in the company.
Founded in Columbus, Ohio in 1969 by Dave Thomas, Wendy’s is the world’s third largest hamburger chain behind McDonald’s and Burger King. A merger between it and Peltz’s Triarc Companies Inc. was completed in September 2008.
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