Wendy’s gets $1.4 billion offer to buy the fast-food chain

An asset management firm is looking to buy fast-food giant Wendy’s and announced Wednesday a $1.4 billion bid to take the restaurant chain private.

By the numbers:

Trian Fund Management, along with several partners, offered $7.35 per share in cash to take over the struggling publicly traded company. The bid placed a nearly 20% premium on Wendy’s valuation when the market closed Wednesday. The company’s stock price, which has fallen approximately 68% over the past five years, jumped more than 14% in the hours following the announcement.

What they're saying:

"Wendy’s sits at a critical juncture," Trian CEO Nelson Peltz wrote. "The external environment has become increasingly challenging given the significant pressures on the U.S. consumer, economic uncertainty, persistent commodity inflation and intensifying competition, particularly within the QSR (quick service restaurant) burger category."

The backstory:

Dublin, Ohio-based Wendy’s and its franchisees operate nearly 6,000 restaurants in the U.S. and have another 1,428 locations spread across 38 countries around the world. Aging stores have been a problem for the restaurant chain, which was founded in 1969 by Dave Thomas and introduced a drive-thru window the next year. The company previously indicated it expected to close 358 stores this year alone.

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More competition

Recently, the chain has faced more competition with expansions of burger chains like In-N-Out and Five Guys. The Associated Press noted that Technomic figures show that Wendy’s share of the burger chain sales fell from 11.5% in 2019 to 10.4% last year.

What's next:

TD Cowen analyst Andrew Charles told the AP that he expects an independent special committee for Wendy’s will evaluate the deal. 

In a message to investors, Charles wrote that going private would be a good move for Wendy’s as it works toward a turnaround, which he believes will take a while and face additional challenges as lower-income customers turn away from quick-serve burgers. 

The Source: Information for this article was taken from the Associated Press and Fox Business. This story was reported from Orlando.