Dive Brief:
- Trian Partners, an investment company owned by billionaire Nelson Peltz, told Wendy’s board of directors that it intended to explore a possible purchase of Wendy's alone or with a third-party. This transaction could include an acquisition, business combination or other arrangement in which Trian would gain ownership of the chain, according to an SEC filing submitted on Tuesday.
- Peltz owns 41.2 million shares in Wendy's common stock, or about 19.2% of the company's shares, and is the chain's largest shareholder.
- Wendy’s said it would “carefully review any proposal submitted by Trian Partners,” according to a press release.
Dive Insight:
Trian and Peltz have been shareholders of Wendy’s for almost 20 years, according to Seeking Alpha. The two entities have also been instrumental in guiding Wendy's business in the past. In 2008, Triarc Cos., Peltz’s investment arm, bought Wendy’s for over $2 billion and combined it with Arby’s, which it owned at the time. Peltz then became a non-executive chair at Wendy’s-Arby’s. Wendy’s sold a majority of its stake in Arby’s in 2011 to Roark Capital for about $450 million.
According to SEC documents, Trian has engaged and intends to continue engaging with Wendy's management about initiatives that can generate or boost shareholder value. Those discussions could include recommendations impacting “strategic direction, operations, capital or organizational structure, technology, unit development strategy, product offerings, talent development and retention strategies, capital allocation and dividend policies, and corporate governance,” according to the filing.
"The Wendy's Company's Board of Directors and management team regularly review the Company's strategic priorities and opportunities with the goal of maximizing value for all stockholders. Our Board is committed to continuing to act in the best interests of the Company and its stockholders,” Wendy’s said in a statement.
Since 2019, the chain has been actively increasing its digital sales and adding technology as it tries to reach 8,000 units by 2025. As of Q1 2022, digital sales made up over 10% of its global sales, according to an earnings release. Breakfast, which Wendy's relaunched in 2020, has seen strong growth in that daypart.
In 2021, Wendy’s announced 30% of its new units would be ghost kitchens, and in 2022 the company said it expects half of unit growth to be through non-traditional units. Wendy's partnered with Reef and plans to open 150 to 200 units through that partnership this year, with plans to eventually open 700 units. Earlier this year, the chain launched a franchise recruitment initiative intended to boost ownership by women and people of color. The company already has over 400 parties interested in becoming franchisees.
During the first quarter, Wendy's added 93 total global units and sales increased 4% to over $3 billion compared to the year-ago quarter. Same-store sales were up 1.1% during the quarter in the U.S. and 2.4% globally.
Given its ongoing growth and positive same-store sales momentum, it's unclear why Trian is making a move to buy Wendy's. Peltz's firm previously bought Wendy's after founder Dave Thomas's death, as company executives struggled to revive the brand, according to Reuters.
“As demonstrated by our recent first quarter results, we continue to make meaningful progress against our three strategic growth pillars, reinforcing the strength and resiliency of the Wendy's brand and driving robust AUV and sales increases,” Wendy’s said.
Correction: A previous version of this article misstated the buyer of Arby's. Roark Capital bought Arby's in 2011 and later formed Inspire Brands.
