Trian Offers $7.35 a Share, About $1.4 Billion, to Take Wendy's Private; Stock Jumps 15%

Nelson Peltz's Trian Fund Management and a group of co-investors proposed on Oct. 28 to take WEN private for $7.35 a share in cash, a deal that values the burger chain's equity at about $1.4 billion. According to the proposal letter attached to Trian's amended Schedule 13D filing with the SEC, the price is roughly a 20% premium to Wendy's Oct. 27 close of $6.14. Flynn Group, BlueFive Capital and Sixth Street Partners are in the consortium alongside Trian, which already owns about 16.3% of the company and would roll its stake into the deal.

Shares jumped about 15% in early trading, but by late morning they were still trading around $7, below the offer price, a gap that suggests the market is not treating the deal as done. The letter describes the proposal as non-binding, with no financing condition and no new debt, and says Trian expects Wendy's board to form a special committee of independent directors to evaluate it. We found no public response from Wendy's as of late morning.

One report stands apart. The Financial Times headlined the bid as a $3.8bn take-private offer. We could not read that article, and nothing in the filing supports $3.8 billion as the offer price. It may describe an enterprise value that includes Wendy's existing securitized debt, which the letter says would stay in place, but that is unconfirmed. The $1.4 billion figure is the equity value implied by $7.35 a share across about 194.0 million fully diluted shares.

The bid revives an approach that Reuters reported in August had been shelved, news that knocked the stock down about 13% at the time. Wendy's shares are down nearly 70% over five years, and the company has been closing restaurants as U.S. traffic weakens: second-quarter U.S. same-store sales fell 7% and traffic fell 12.5%. Trian's letter also points to approaching debt maturities as a reason to act now. What to watch: the special committee's response, whether a rival bidder emerges, and whether the stock closes the gap to $7.35.